The markets ended trading on Monday with the bears in control of market sentiment and the dayis trading activity. Investor jitters about the upcoming Federal Reserve Board meeting and the pending results from Cisco Systems sent the major indexes decidedly south for the day. In Monday trading even blue chip stocks took a beating as the Dow and the NASDAQ Composite Index fell below important support levels.
The Dow Jones Industrial Average finished off about 200 points at 9,808.04. The S&P 500 Index ended Monday matching the Dowis two-percent decline to close at 1,052.23. The NASDAQ Composite Index dropped 34.55 to end the day at 1,578.48.
On Friday the NASDAQ Composite Index had continued its downward trend on reports of ongoing weakness in the technology sector and in response to the jobs data that indicated the unemployment had reached six percent, its highest level in several years. However, the jobless rate is often a lagging indicator of economic performance. An increase in jobs often follows the first stages of economic growth and sometimes the highest levels of unemployment are recorded just after a recession has ended.
Wall Street is primarily interested in earnings growth and until new economic activity works its way to corporate bottom lines, job cuts are being used to shore up sagging performance. The NASDAQ Composite Index is a tech-heavy stock performance measure. The tech sector continues to feel the effects of the dot.com implosion and cutbacks in corporate IT spending. Experts believe the tech sector will continue to lag the broader economy in growth through the second and third calendar quarters of 2002.
World Wide Developers Conference
Appleis annual World Wide Developers Conference opened to a keynote by Apple CEO Steve Jobs. In his address to attendees, Mr. Jobs announced the end of development of OS 9 and provided developers with a preview on the next major upgrade to OS X to be released this summer. The OS X upgrade, code-named "Jaguar", will include greater compatibility with Windows-based networks, handwriting recognition, and iChat, Appleis own instant messaging product that will be compatible with AOLis instant messaging service. Apple will also release a rackmount server, a product that has been desired from Apple by scientists and researchers. Apple ended Monday trading under $23 per share, dropping $.86 to close at $22.65.
In other Apple-related news, the eMac continues to receive rave reviews and fortifies Appleis arsenal of products as the education buying season begins in earnest. No doubt the aggressive pricing on the eMac will pinch Appleis margins in the companyis third and fourth fiscal quarters, but the high-performance, modestly priced CRT successor to the original iMac should help Apple solidify its position as the hardware sales leader in the K-12 market.
A quick look at the online Apple Store reveals bundled promotions on iPods purchased with new Macs and discounts on Airport hubs when purchased with an iBook or Titanium PowerBook. Apple is focused on increasing revenue in two ways: Increasing the sales of related such as iPods and Airport wireless products to purchasers of new Macs and converting new users to the platform through the opening of additional retail stores. At least forty-nine Apple Retail Stores should be open by the end of the 2002 calendar year.
The Dow Jones Industrial Average continues to outpace both the S&P 500 and the NASDAQ Composite Index in 2002. Blue Chip stocks have become a haven for skittish investors. The Dowis comparatively better performance would be more pronounced if it werenit for the weakness in IBM, the grandfather of all tech stocks and a heavily weighted Dow component. On Friday Big Blue set a new 52-week low and in Monday trading dropped an additional $5.78 to close at $76.00 per share, its lowest closing price in more than three years.
Since the return of Steve Jobs in 1997, AAPL has out paced the major market indexes in performance. However, since the days AAPL began public trading, the stock has dramatically under performed for investors when compared to the broader market. AAPL now trades in the same price range it called home in the mid to late 1980is. Apple was the archetype of the modern-day Silicon Valley IPO but its performance over a more than twenty-year period has not lived up to its vaunted legacy. What may be plaguing AAPLis performance today is the same concern that kept a cap on its price fifteen and twenty years ago. The market wonders where Apple will find growth. If Apple can address that obstinate concern, AAPL may begin to trade at a level that better reflects the strength of the companyis balance sheet and in line with the broader marketis performance over the twenty-year plus period of time.
This morning the ticker symbol for Hewlett-Packard officially changed from HWP to HPQ. On Tuesday the company will make public its plans for the integration of Compaq into its operations. Large job cuts are expected as HP completes the largest technology merger in history.
The combination of big tax cuts and dramatic drops in interest rates have helped to underpin growth in a challenging economic environment. Congressional leaders are working at passing large spending increases in the areas of agriculture, health care and anti-terrorism initiatives. The increased spending will undoubtedly stimulate activity in certain sectors of the economy. No matter the long-term effects of increased spending on interest rates and the national debt, last weekis employment report makes it less likely the Federal Reserve Board will consider even a modest increase in interest rates at its next meeting.
In Monday trading:
Apple (AAPL) finished Monday trading at $22.65, down $.86.
Hewlett Packard (HPQ) ended its first day of consolidated trading following the Compaq merger at $18.22, up $.78. Trading in Compaq was officially stopped before Mondayis market open.
IBM (IBM) closed Monday at $76.00, down $5.78.
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.