NASDAQ Drops To Mid-1997 levels, Apple Continues To Fall

Monday Morning Activity

The markets continued their broad decline Monday morning in the aftermath of Fridayis calamitous 390-point drop in the Dow Jones Industrial Average. In early Monday trading the Dow dropped below the significant 8,000-point marker, falling just over 300 points to an intra-day low of 7,719.29 by early afternoon. The NASDAQ Composite Index fell below the 1,300-point level for the first time since May 1997 while the S&P 500 Index trended down in morning trading, falling more than three percent by the noon hour.

President Bush Tries to Calm Investor Jitters

On Monday President Bush tried to reassure wary investors that the fundamental underpinnings of the economy remain strong. Recalling his own market watching days, the president commented that buyers will return to the markets when stocks are perceived to be trading at value prices, and he believes that value conditions in the markets in terms of stock prices relative to earnings are continuing to improve. President Bush once again suggested that swift legislative and executive action to clean-up corporate accounting abuses and scandals would renew the confidence of investors, though without offering any specifics. On Sunday WorldCom formally declared bankruptcy in the largest Chapter 11 filing in the nationis history, eclipsing the size of the Enron bankruptcy filing just several months ago.

Monday Afternoon Activity

Rising from its more than 300 point loss at 12:30 p.m., the Dow Jones Industrial Average crossed into positive territory at the 2:00 p.m. hour only to fall more than 200 points again in the final two hours of trading. At the close, the Dow Jones Industrial Average stood at 7,784.58, down about 235 points on the day and visiting a point level last seen in early October 1998. The S&P 500 Index finished at 819.85, down 27.91. The NASDAQ Composite Index ended the day at 1,282.65, off 36.50. The NASDAQ is now at a level first reached in May 1997, more than five years ago. Apple closed at $14.92, down $.04.

Apple

In Monday morning trading Apple fell further below the $15 per share mark, a level at which the entire company is valued at a mere $1 billion above its cash holdings. This means at the current trading price, investors value Appleis real estate holdings, patents, technologies, brand name and all other assets combined at no more than $1 billion. Appleis continued slide to what some watchers might consider an irrational price level, is indicative of the conditions facing most large publicly traded companies in todayis market.

In other Apple news, the company announced the release of Shake 2.5 for Mac OS X. Shake became an Apple product when the company acquired digital effects and compositing software maker Nothing Real earlier this year.

In an interesting interview in Newsweek, Steve Jobs talks about the difference between Apple and Dell and the current state of the Mac. Please see the TMO coverage of the interview for more insights and information.

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