Ugly Day for Tech Stocks, Apple's Stock Tumbles

An uncertain economy, higher oil prices, disappointment over yesterday Fedis decision to hold its tightening bias, uncertainty in the US presidential election and next weekis Thanksgiving Day holiday in the US have combined to sideline many caution institutional and private investors. Tech stocks took a beating today and Appleis stock was no exception.

There is hope on Wall Street that a short term trading rally may ensue if the stalemate in the presidential election should — against the odds — come to a conclusion this weekend.

Meanwhile, other analysts point out the stock markets donit really care who wins the presidential elections, but seem to disapprove of the delay going on in Florida. In fact, once the election is finally decided, whoever wins is likely to have a much reduced mandate resulting in a Washington racked by years of policy gridlock. The stock markets generally fare well under such conditions since it means the Federal government wonit be able to intervene effectively in business as usual.

Appleis stock dipped 7/8, or -4.40%, to close at 19 dollars on low volume of 4.2 million shares.

The G4 Cube won "Product of the Year" from Home Office Computing Magazineis 3rd annual list of 100 best products as announced in an awards ceremony at Comdex. Other Apple products such as the PowerBook, Appleis LCD 15" Studio Display and the Airport also placed in their respective product categories.

The Nasdaq shed 133 points (-4.20%) to close at 3032 on volume of 1.4 billion shares. The Nasdaq is down 9% since the presidential elections began and down 24% year to date.

After Applied Materials (AMAT) cautioned sales going forward may be weaker than forecast. Merrill Lynch also cut its ratings on a number of communication semiconductor manufacturers further adding to the weakness in chip and network related stocks.

The Dow lost 50 points (-0.47%) to close at 10656 on low volume of 932 million shares. Food, hospital, HMO and other defensive stocks fared well today.

The S&P 500 lost 17.40 points (-1.25%) to close at 1372.41.

In Apple related businesses: Akamai lost 5 dollars to 42 1/16. Adobe gained 5/16 to 81 1/2. IBM dropped 1 1/16 to 98 5/16.

The PC stocks were a sea of red: Compaq shed 1.34 to 25.57. Dell lost 1/4 to 24 15/16. Shares of Microsoft gave back 1 1/8 to 68 15/16.

Gateway has launched a new division called "Gateway Connected Home", which plans to peddle home networking solutions and Internet appliances from the PC vendoris Country Store outlets. Gateway lost 2.30 to 39.35.

In economic news: The consumer-price index (CPI), a measure of inflation at the retail level, climbed a mild 0.2% in October as forecast by economists. In September the CPI was higher by 0.5%. So far this year consumer prices have climbed 3.6% as compared to the 2.7% rise in 1999. However, much of this yearis inflation pressure has come from higher energy prices.

Less optimistic observers note that Octoberis consumer inflation would have been stronger but for an unexpected 2.8% drop in tobacco prices and a 0.4% fall in auto prices.

Perhaps the biggest argument among economists today is whether inflation is a real danger or whether deflation, the inability of businesses to maintain profit margins, is even a bigger danger as the economy begins to slow. The Federal Reserve still believes inflation is the greater threat to prosperity, while business leaders and some new-age economists tend to believe that deflation is the macro-trend as global competition increases due to the Internet and the Information Age economy.

Either way, most observers are predicting the Federal Reserve has reached the end of interest rate hikes and perhaps as early as their next meeting in January will return to a neutral policy bias from the current bias towards tightening.

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 updated Apple Stock Watch Special Report.