Rate Cut Hopes Spark Rally, Apple Up 4.3%

The markets went into rally mode today as investors once again became excited about another rate cut from the Fed. With the continuing bad economic data rolling in and earnings warnings still rolling out of corporate headquarters across the country, many analysts feel that another rate cut is definitely in the offing. Better yet, from Wall Streetis point of view, it seems more and more likely that such a cut will be yet another 50 basis points (a half of a percentage point) as opposed to the 25 basis points that had been looked for before this week. From a Reuters report:

"The earnings preannouncement jitters continue to prevail, but there is optimism the Fed will continue to be accommodative when it meets next week in lowering interest rates," said Alan Ackerman, a market strategist at brokerage Fahnestock & Co. "More and more people are hoping for a 50-basis-point cut."

That mood helped investors ignore new earnings warnings from Transmeta and other tech stocks as investors looked a few weeks into the future. From the same Reuters report:

"You get hit in the head with a two-by-four enough and it stops to hurt," said Tony Maramarco, a portfolio manager for David L.Babson & Co., which oversees $15 billion. "Weire at a time in the earnings-release cycle where the big names have already said what they have to say and any incremental piece of bad news has less and less effect on the market place."

Not all analysts were so sanguine, of course, as some see the rally petering out into a narrow trading range. From a CBS Marketwatch report:

"With little or no evidence that things will be better soon, investors seem to be latching on to anything that will give them hope. Everyone wants to be first in line, but not too far out in front. I still think weire stuck in a trading range. We wonit be testing the old lows, but thereis nothing in the near term thatis going to break us into new highs either," commented John Forelli Senior Vice President and Portfolio Manager at Independence Investment.

"With the Fed easing cycle coming to a close, the market will need an improvement in corporate earnings, or signs of a rebounding economy, to serve as a catalyst. The market is in a transitional phase. It has likely seen the end of the bear market, but it has not brought about the resumption of a bullish trend," S&P Investment Policy Committee said in a research note.

Be that as it may, the markets saw strong buying on even stronger volume. The Nasdaq traded some 2.1 billion shares while the Dow traded 1.7 billion shares. Thatis the strongest across the board volume we have seen in weeks.

Apple got a nice mention in an article about companies offering services that allow schools to provide all of their student information online. Apple recently bought PowerSchool, which the ZDNet article said is one of the most popular of the systems being offered. The article also quote PowerSchool as saying that their system is used by some 2,700 schools in the US.

Apple was the subject of another article that covered the keynote speech at this yearis MacHack conference in Dearborn, Michigan. That keynote reunited Daniel Kottke, Bill Atkinson, Donn Denman, Andy Hertzfeld, Jef Raskin, Caroline Rose and Randy Wigginton, all member of the original team that built the first Macintosh. The seven served on a panel and were asked many questions, including their thoughts on Mac OS X, Aqua, and Steve Jobs. Itis a very good report, and we recommend it.

Apple traded higher in moderately light volume today, in a trading range of 21.10 - 23.

Apple closed at 20.55, a gain of 94 cents (+4.36%), on light volume of 6,095,200 shares trading hands.

The daily statistics will return in Fridayis Stock Watch.

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