The Financial Stocks Rule, Apple Declines

The July employment report provided more evidence to support the view that the Federal Reserve is not going to raise interest rates again before the US Presidential elections, adding support to what would otherwise have been a slow and dull Friday in August. Nevertheless, tech stocks traded mixed at best and shares of AAPL ended lower.

Apple sank 5/8 to close at 47 3/8 on volume of 4.2 million shares.

It wasnit a good week for AAPL. The stock price opened on Monday at $49, hit an intraday low of $44.25 yesterday bounced back to $51.25 this morning and then spent the rest of today selling off. Apple has been in a down trend since July 13th. Yesterday looked like a decisive bottom and the beginning of a new up trend for AAPL, but todayis negative follow through weakens that assertion. Although this weekis chart pattern is remarkable similar to AAPL last major bottom on May 25 through June 1st.

CNET News reported, "Appleis PowerMac G4 Cube and several of the new iMacs are in short supply at distributors Ingram Micro and Tech Data, sources said. While high demand is a factor, so is Appleis practice of not shipping systems to distributors before the official product launch. This helps Apple maintain secrecy about new products, but it prevents stores from getting computers right away."

The Nasdaq climbed 27 points (0.73%) to closed at 3787 on volume of 1.4 billion shares.

The Dow climbed 61 points (0.57%) to close at 10767 on volume of 948 million shares.

The Broker/Dealer Index (XBD) appears to be breaking out to new highs, a bullish event that never happens just before a market down turn. Meanwhile, the Philadelphia Banking Index (BKX) is trending towards new highs. This combined with the new an all-time high in the S&P financial Index, a basket of banks, brokers and Insurance companies, would suggest that investors feel that interest rates are moderating and the stock market is over due a broad rally.

However, some observers believe the Philadelphia Utilities Index (UTY), which hit two all-time highs this week, is an indication that earnings are at an all time high and will begin to decline as the economy slows down making the utilities a safe, if conservative, bet for the future.

The S&P 500 climbed 10.37 points (0,71%) to close at 1462.93.

In Apple related businesses: Akamai climbed 2 3/8 to 77 3/8. Adobe bounced back 3 dollars to 116 3/4. Earthlink gain 1/8 to 10 15/16. Motorola lost 5/8 to 35 5/16 in the weak cell phone group.

IBM lost 1/8 to 115 7/8 after the company agreed to work with Microsoft to make the new Extensible Markup Language (XML) a common Web standard.

Appleis competitors: Dell gained 7/16 to 41 3/8. Gateway was higher by 3 3/8 to 59 dollars. Compaq traded flat at 29 dollars. Intel lost 2 1/2 to 62 9/16. Hewlett Packard lost 1/4 to 111 3/4.

Shares of Microsoft lost 1 1/8 to 69 1/8 after yesterdayis news that the European Union is pursuing its own version of the US antitrust suit against the company.

In economic news: The US unemployment rate held steady at 4% in July, but the payroll in the private sector slowed from Juneis rate. Unemployment hit a 30-year low of 3.9% earlier this year.

The average hourly wage was up by 3.7% annually in July or by six cents to $13.76.

According to the Wall Street Journal, "Joel Naroff of Naroff Economic Advisors in Holland, Pa., said he expects the Federal Reserve to leave interest rates unchanged at least until after the November presidential elections. iClearly, 3.7% over the year is not going to immediately cause the Fed to do something,i he said"

The Mac Observer Stock Watch Virtual Portfolio is near its low for the year.

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.

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