Nasdaq and Apple Lose August's Momentum

Downgrades and more profit taking turned the Nasdaq into a sea of red for a second day, but the Dow continued higher. Appleis stock, after three weeks of upward momentum, is finally giving some back.

MP3 (MPPP) lost an important court case to Universal today when a federal judge ruled MP3 "willfully infringed" on Seagramis Universal Music Groupis copyrights in its database. MP3 could be assessed damages of up to $450 million in the next phase of the trial. At least one analyst recommended "dumping" shares of MP3, according to CNBC. Trading in the stock was halted after the judgment.

Apple sank 3 5/8 or 5.81% to close at 58 13/16 on high volume of 5.6 million shares.

After yesterdayis bleak prediction by US bancorp Piper Jaffray that PC sales might be only half as strong as expected in the second half of 2000, Bear Stearns checked into personal computer demand and claimed that Apple, Dell, Compaq and Gateway continue to meet "normal seasonal trends."

The Nasdaq fell 129 points (-3.13%) to close on the dayis low at 4013 on high volume of 1.7 billion shares. The Index is now back in the red for 2000 after sliding 210 points in the last two days.

Another semiconductor stock downgrade clobbered the Philadelphia Semiconductor Index ($SOX) today. "Donaldson, Lufkin & Jenrette downgraded memory component maker Micron (MU) to an "underperform" rating from a "buy," citing an earlier-than-anticipated fall in dynamic random access memory (DRAM) chip spot prices. DLJ also sliced its price target on Micron to $50 a share from $122, on expectations of weaker contract pricing in the second half of the month," reported CBS MarketWatch.

The Dow climbed 52 points (0.47%) to close at 11313 on volume of 998 million shares. Crude oil continued to set new record highs, trading at $34.90 per barrel late in the day.

The S&P 500 dropped 14.82 points (-0.98%) to 1492.26.

In Apple related businesses: Adobe fell 3 13/16 to 129 7/16. Earthlink climbed 1/2 to 12 5/8. Motorola lost 11/16 to 34 9/16.

Akamai beat the undertow with more announcements of businesses signing up for distribution on the companyis Internet content streaming service. Akamaiis stock climbed 2 1/16 to 69 15/16.

IBM climbed 1 3/4 to 132 15/16. Bear Stearns raised its earnings estimate for IBMis year 2000 earnings estimate from $4.35 per share to $4.45, based on an expected increase in margin services and in revenues.

Appleis competitors: Dell shed 1 1/2 to 39 1/2. Gateway was lower by 1.71 to 62.26. Compaq gave back 11/16 to 231 9/16. Shares of Microsoft fell 9/16 to 69 9/16. Intel fell 3 7/16 to 65 13/16.

In economic news: The productivity figure for the second quarter was revised upward to a 5.7% annual rate, strongly indicating that inflation is under control. Productivity grew at 1.9% rate in the first quarter of 2000.

The Wall Street Journal commented:

"Indeed, though average hourly compensation, rose 1.7% after stagnating in the first three months of the year, labor costs per unit fell by 0.4% in the second quarter. Economists expected unit labor costs to slip by only 0.2%. Faster productivity growth tends to lower the risk of inflation because it allows employers to raise wages without needing to pass the added cost on to consumers. Over the 12 months through June, for example, unit labor costs declined by 0.4%, the biggest year-on-year decline since 1984"

The Mac Observer Stock Watch Virtual Portfolio continued south today.

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 Apple Stock Watch Special Report.