Morning Markets Tank, Rally In The Afternoon, Apple Up

As we were busy setting up the type to print the headline "Market Meltdown Meets Jumping Investors On The Way Down," the markets had the nerve to bounce off of some awfully low lows. Morning trading was dominated by pessimism on the state of the economy as the National Association Of Purchasing Managers (NAPM) issued a report that came just shy of expect ions. The manufacturing index came in at 41.9, shy of the 42.0 forecast, but ahead of last monthis 41.2 rating. That set traders on edge early, but the sentiment started to shift around to the idea that the economyis descent may have slowed. Enter the rally.

The main event that sparked the rally was Applied Micro not tanking on bad news. The company warned that current quarter results would be less than expected, and when the stock didnit nose dive, the markets took this as a bullish sign. IBM also indirectly contributed when rumors began circulating that the company would have a better than expected quarter. Add to that the fact that prices were so low, a lot of money that had been sitting on the sidelines found its way in to snap up some bargains. The Nasdaq rose from an 80 point decline to a 31.5 point gain, quite a feat. The Dow recovered from a 173 point loss to end the day only 45 points off.

Gateway took a hit today for warning after yesterdayis closing bell. This followed some rather positive comments before the bell by Gateway CEO Ted Waitt during an analyst meeting before yesterdayis closing bell. Gateway shed more than 8.4% and that encouraged Bear Stearns analyst Andrew Neff to start spouting his drivel about the impending consolidation in the industry. From a report by Reuters:

Bear Stearns computer hardware analyst Andy Neff criticized the companyis strategy for recovery as unclear and suggested the sectoris woes might signal a wave of mergers.

"In our view, the main question is not the companyis revised outlook and significantly reduced forward expectations but the bigger issue is: is this the precursor to a wave of consolidation?," he wrote in a report.

He must be quite frustrated now that despite his constant repeating of this mantra, companies have yet to start lining up to sell themselves to each other. Mr. Neff has also suggested that Apple switch to the X86 architecture for its processor line.

In a Forbes piece, David Simons put Apple in perspective in an interesting way. Comparing Internet stocks to early PC stocks, Mr. Simons suggests that Amazon might be like Apple and be among the few early Internet pioneers to survive another 15 years, as Apple was among the only early PC companies to survive that industryis growth.:

Of course, history rarely repeats exactly, and drawing parallels can be misleading. Just in terms of sheer numbers, chances of survival are better among the hundreds of Internet stocks than it was for the dozens of publicly traded first-generation PC companies. But mere survival doesnit predict Dell-like success. Sure, Amazon might become the Apple Computer of this decade. But odds are that Internet companies not now on investorsi radar will be the biggest winners.

Thanks to Observer Jim Coffman for his observations on the Forbes article.

Apple followed todayis trends, bouncing off of the 50-day moving average in the late afternoon rally. Apple dipped below 18 for the first time since early January, but rallied to close at 18 3/4 before all was said and done. The dayis range was 17 3/16 - 18 3/4 on light volume.

Apple closed at 18 3/4, gain of 1/2 (+2.74%), on light volume of 5,891,000 shares trading hands.

The Nasdaq closed at 2183.37, a gain of 31.54 (+1.47%), on volume of 2,246,125,000 shares trading hands.

The Dow closed at 10450.14, off by 45.14 (-0.43%), on volume of 1,284,389,000 shares trading hands.

The S&P 500 closed at 1241.08, a slight gain of 1.14 (+0.09%).

Akamai had coverage initiated by Prudential today at a Hold rating. On24 has an audio report on this news. Apple closed at 17, a gain of 1/16 (+0.37%), on light volume of 1,767,700 shares trading hands. Apple is a large shareholder of Akamai.

Adobe was included in a report on software companies at The Motley Fool today. The stock was one of the few stocks we track that closed in negative territory today. ADBE closed at 28 1/16, down a point (-3.44%), on volume of 5,935,700 shares trading hands.

IBM posted a nice gain in the face of the rumors that the company was talking up its current quarter. IBM closed at 106.05, a gain of 6.15 (+6.16%), on strong volume of 15,078,600 shares trading hands.

Motorola closed at 15.93, up 0.76 (+5.01%), in strong volume of 17,487,500 shares trading hands.

Earthlink went nowhere fast today, closing at 9, unchanged (0.00%), on light volume of 1,491,900 shares trading hands.

Gateway was punished for warning, as the stock closed at 15.75, a loss of 1.45 (-8.43%), on strong volume of 6,083,600 shares trading hands.

Dell also was not able to shake off morning losses as the stock closed at 21 1/2, down 3/8 (-1.71%), on light volume of 30,925,900 shares trading hands.

Hewlett Packard closed higher today at 29.00, a gain of 0.15 (+0.52%), on strong volume of 9,689,600 shares trading hands.

Intel closed at 29 1/8, up 9/16 (+1.97%), on strong volume of 56,182,100 shares trading hands.

Microsoft closed at 59 23/64, up 23/64 (+0.61%), on strong light volume of 40,816,100 shares trading hands.

For full quotes on all the companies mentioned in this article, we have assembled this set of quotes at Yahoo! for your reference. For other stories regarding Appleis stock activity, visit our updated Apple Stock Watch Special Report. You can also check out our Apple Financial Boards, a new moderated forum for Apple Investors and people who are interested in Appleis financial dealings.