Brutal Day for PC Stocks, Apple Tests Support

Signs of a cooling economy helped boost the Dow to a near triple digit gain, but the tech stocks on the Nasdaq were unable to advance and ended mixed with a downward bias. Apple lost 4.18% after Dellis problems with bottom line growth spoiled the market for most PC vendors.

Apple sank 2 1/16 to close at 47 1/4 on volume of 2.8 million shares.

Appleis stock is perched precariously at the lowest level of its $48 dollar support zone, threatening to turn the last 8 days of trendless trading into a pronounced downturn. Apple Inc. has in the past quarter supported their stock by exercising the companyis stock buy back program in the $48 zone. Will they support the stock again or has Apple decided that they can buy shares back cheaper later in the week?

A CNET report by Joe Wilcox outlined a critique of Appleis policy of not including CD-RW drives in any of its computer offerings.

According to Wilcox: "Just a year ago, CD-RW seemed insignificant, with only 1.7 percent of systems sold at retail shipping with the drives, according to PC Data. But by October, the figure had jumped to 19 percent. By January, it was up to 40 percent, an average that has consistently held throughout the year. Apple failed to respond to repeated requests for comment. Analysts, however, agreed that the company failed to latch onto the trend."

Apple does include recordable DVD drives as a custom option available at the Apple Store online.

The Nasdaq slipped lower by 27 points (-0.73%), after rallying higher in the morning, to closed at 3658 on volume of 1.4 billion shares.

The Dow climbed 80 points (0.76%) to close at 10687 on volume of 987 million shares.

The S&P 500 budged only 0.60 points (0.04%) to close at 1438.70.

In Apple related businesses: Adobe climbed 1 7/8 to 116 5/16. Earthlink gained 3/16 to 11 1/8. Motorola climbed 1 3/4 to 36 3/4. IBM climbed 4 3/16 to 114 11/16.

Akamai slid 2 5/8 to 68 5/8 on a CNET report that the company faces stiff new competition in the Internet content-distribution market. "Akamaiis success and ensuing stock market valuation have helped spawn numerous competitors. One potential investor who reviewed Axientis (a new competitor of Akamaiis) plans said ithe entire premise was theyire going to be an Akamai-killer.i"

Appleis competitors: Gateway lost 1 1/16 to 53 1/8. Compaq gave back 1/2 to 27 15/16. Shares of Microsoft climbed 11/16 to 69 3/8. Intel fell 1 5/16 to 63 5/16. Hewlett Packard gained 4 5/8 to 112 1/2.

Dellis stock faltered by 2 dollars to 39 9/16, for a second day of deep declines, after word leaked out yesterday that Bear Stearns PC analyst Andy Neff said Dellis revenue could come in at $7.7 billion, well below the forecasts of $7.83 billion.

Today, U.S. Bancorp Piper Jaffray analyst Ashok Kumar lowered his rating on Dell to "buy"i from "strong buy". Mr. Kumar said, "We continue to believe that Dell does not have adequate earnings power in notebooks, server and non-system revenue to offset the secular weakness in consumer and commercial desktops..While we expect Dell to continue to deliver on the bottom line, we are skeptical that the company will be able to meet the 30 percent revenue growth expectations on a sustainable basis." Dellis stock price is nearing its 52-week low of $35 set in early February and is below its two-year moving average.

In economic news: The Commerce Department reported that new home sales fell 3.7% in June to the slowest pace in more than two years. Meanwhile, the Conference Boardis index of leading indicators, a measure of future economic activity, came in unchanged in June at 106.

Together the two pieces of data point towards a slowing economy for the second half of 2000 and thus reduce the chances for an interest rate hike later this month by the Federal Reserve.

The Wall Street Journal remains cautious: "In recent days, there have been cross-currents in the governmentis economic statistics on the key question of just how much the economy has slowed. Last week, the government reported that the overall economy accelerated in the second quarter, with gross domestic product growing at an annual rate of 5.2%. Many economists had been expecting to see a slowdown."

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.