Apple Bakes Averages
An earnings warning from Apple and some stronger-than-expected economic news
helped raise anxiety levels enough to send stocks into a nosedive Friday,
erasing most of Thursday’s gains.
Volume remained heavy and came to within a few percentage points of
Thursday’s active levels, with 1.95 billion shares trading on the Nasdaq and
1.13 billion shares trading on the NYSE.
In economic news, the Chicago Purchasing Managers Index came in at 51.4%,
which was higher than the 48.9% that analysts had expected.
The PMI figure again hints at an economy that could have more inflationary
pressures than meet the eye and could account for some of the nervousness during
Friday’s session.
“I characterized the market to our trading desk a few days ago as a ping
pong match, and it really is sort of an emotional ping pong match that is
punctuated by expectations of earnings and people announcing that they weren’t
going to make those earnings.” said John Trammell, Managing Director,
Argonaut Capital Management.
“I do believe there is a new fear creeping into the market that was
started first by oil prices and then the talk from the government that there
could be a little more inflation in the economy than we had previously believed,”
he added.
According to preliminary numbers, the Nasdaq fell 105.63 to 3672.69, the Dow
dropped 173.14 to 10,650.92, and the S&P 500 sliding 21.77 to 1436.52.
Top sectors included chemicals
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up 1.6%, and broker/dealers
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Sector under the most pressure were semiconductors
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5.5%, technology
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3.8%, and airlines
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Apple Computer
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to 25 3/4, its lowest level since July, 1999.
Apple’s woes depressed most of the big-cap tech giants, with big declines
hitting Dell
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Microsystems
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Joining Intel as the biggest Dow losers were Hewlett Packard
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6.5%, Home Depot
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Looking to next week, the National Association of Purchasing Managers Index
for September and August’s construction spending numbers will be released Monday
at 10:00 AM ET. Estimates look for a 50.3% NAPM and a 0.4% increase in
construction spending.