NASDAQ Tests 5-Year Lows, Apple Drops Below $14 Per Share

Monday Morning Activity

The markets moved lower in early Monday trading as economic worries continued to overhang the Street. The major market indexes moved gradually lower from the opening bell and were down roughly two percent soon after the noon hour. Walt Disney Co., a Dow Jones Industrial Average component, has been hammered hard by investors due to the disappointing performance of its theme park unit. Moodyis and Standard & Pooris are reviewing Disneyis credit rating in light of its high debt and lackluster earnings. Disney fell to an eight-year low in Monday trading.

Friday Recap

Last week the markets reacted to global economic news including a slowing in the pace of the US economic recovery. The nationis Gross Domestic Product (GDP) numbers for the second quarter came in well below estimates and the financial crisis in Uruguay forced the Bush Administration to modify its policy concerning emergency loans to struggling nations.

Despite low interest rates, corporations are finding it more difficult to borrow and the spread between the rates on treasury securities and corporate bonds has widened. Banks are charging a risk premium on corporate loans as the fallout of accounting scandals and sluggish economic growth continue to take their toll on corporate America.

With interest rates already at their lowest levels in about forty years economic policy makers have little left in their arsenal to push the economy to a faster rate of growth. Consumer confidence plunged in July and the markets have been reacting in volatile ways to both encouraging and disappointing economic news. At weekis end the Dow had lost virtually all of last Mondayis near-record gain.

Monday Afternoon Activity

Analysts and investors are now concerned that the slowing pace of economic growth, compounded by the recent dramatic drop in stock prices, may signal a risk of a double-dip recession. On Monday investors were treated to news that growth in the nationis services sector has slowed. By early afternoon the NASDAQ Composite Index was moving to test its recent 5-year low and the broader markets followed the NASDAQis more than three percent drop on the day. The Dow Jones Industrial Average dropped 269.50 to close at 8,043.63. The S&P 500 Index fell 29.64 to end at 834.60. The NASDAQ Composite Index finished off 41.91 at 1,206.01. Apple lost $.46 to close below the $14.00 per share market at $13.99.


Apple continues to trade perilously close to its recent 52-week low of $13.80. The lack of optimistic estimates for the current quarter and analyst concerns about channel inventory keep a cap on Appleis stock price. Apple has distressed its product user community by converting its consumer Internet services program from a free service to a premium priced service with enhanced features. The $129.00 price tag for the forthcoming update to Mac OS X called "Jaguar" has also earned the company the ire of its customers.

However, Apple continues to rollout new stores and position its product line for renewed sales growth as the economy fights to maintain growth. Compared to other PC makers, Appleis balance sheet is strong and flush with cash. At todayis closing price, Apple is valued at no more than $700 million above its cash holdings.

Check out the new and vastly improved Apple Finance Boards, a moderated forum for Apple Investors and people who are interested in Appleis financial dealings!

For full quotes on all the companies mentioned in this article, we have assembled a set of stock quotes at Yahoo! for your reference. For other stories regarding Appleis stock activity, visit our updated Apple Stock Watch Special Report.