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RealTime IT News

Apple's Warning Weighs On Stocks

Apple Computer lost half its value on Friday after warning that earnings will be 30% below expectations, dragging the market broadly lower. A United Airlines warning also weighed on stocks.

Internet stocks were relatively strong, with the ISDEX only slipping 5 to 772. The Nasdaq lost 61 to 3716, the S&P 500 declined 10 to 1448, and the Dow dropped 97 to 10,726. Volume declined to 425 million shares on the NYSE and 775 million on the Nasdaq. Breadth was even on the NYSE, but decliners led 21 to 14 on the Nasdaq. For earnings reports, visit our earnings calendar and reported earnings. For after hours quotes and news, visit our new after hours trading site.

Wireless handheld device makers were strong on better-than-expected earnings from Research In Motion , which soared 14 13/16 to 98 1/4. Handspring gained 1 7/8 to 78 1/4, and Palm added 1 1/4 to 53 3/8. InfoSpace added 9/16 to 30 1/2.

Net Perceptions plummeted 7 1/2 to 5 after warning that third-quarter losses will exceed estimates of a 13-cent loss by 9 to 19 cents.

theglobe.com dropped 7/32 to 25/32 after warning that revenues will be about half of what Wall Street expected.

America Online slipped 3/4 to 53 5/8 on news that the European Commission may approve its merger with Time Warner - if the companies drop the $20 billion merger between Time Warner and EMI.

Looksmart slipped 11/16 to 11 7/16 after announcing the $20 million acquisition of Zeal Media, which allows users to categorize Web site descriptions.

i2 Technologies gained 2 7/8 to 195 3/8 on a First Union Buy rating and $230 price target. Commerce One gained 3 1/2 to 83, pushing through 80 resistance.

Telecom equipment stocks were mixed. Bellwether Cisco Systems fell 2 1/2 to 56 7/8. But Juniper Networks , which has been mentioned as a possible addition to the S&P 500, added 1 1/8 to 229 1/8.

Some technical comments on the market: Note: We will now be including charts with the technical market commentary; just click on the links in the story below to go to them. If you have trouble accessing the charts via the e-mail newsletter version, try this link: http://www.afterhourstrading.com/column.html

Well, we said yesterday that we weren't sure whether this rally would turn out to be more than a bounce, and so far the results aren't encouraging. However, despite the magnitude of Apple's warning, the indexes have only given up about half of yesterday's gains, so that's encouraging. Besides, the PC sector hasn't been a market leader in quite some time. If the real leaders like Corning, Juniper or Ariba begin to warn or disappoint, then we'd have signs of real trouble.

We'll focus on the S&P 500, which seems to be dictating the action here. For the second time this week, the index was rejected at its broken May trendline (the upper black line. Also note that critical support, the lower line around 1420 that represents the April trendline, was pierced slightly two days ago; never a good thing). This repeated rejection at a broken uptrend line reinforces the fact the index's current trend is down. To negate that, the index needs to get above 1460 and that broken trendline, which will continue to rise. The good news, and it may not last, is that the S&P 500 is still above its downtrend line that began earlier this month. Also not looki