U.S. markets rebounded from yesterday's sharp decline, closing higher despite a continued slide in the Japanese market.
After hitting a new 52-week high yesterday, Apple Computer reached a new peak today, rising 2.72 percent to close at 40.06.
"There's a lot of cash coming in to the U.S. markets both domestically and from overseas because it is lower than the peaks it has hit this year," said Lawrence Silver, an analyst at Raymond James. "It might take it longer to retrace its steps...but this correction is going to go back into a bull market."
Computer Associates shares also gained today, rising 4.4 percent after chief executive Charles Wang assured investors that the company's core business and financial fundamentals remain strong (See related story).
The company is struggling to rebound from last month's one-day 31 percent drop after it disclosed that revenues were down because of the Asian crisis. CA shares closed at 38.44 today. The stock has traded as high as 61.94 and as low as 30.63 during the past 52 weeks.
Shares of Adobe Systems fell nearly 12 percent today after the company warned yesterday that it would fall short of Wall Street's third-quarter earnings expectations. The company also reported that three of its top executives--including its CFO--had resigned, and that it will impose layoffs of up to 10 percent of its workforce.
Shares of Adobe closed below the company's 52-week low, at 27.38. The stock has traded as high as 52.99 and previously as low as 29.75 during the past 52 weeks.
After a long bull run on Wall Street, the U.S. markets have been experiencing jitters lately--though not as grim as those suffered in the Asian markets. The Dow plunged 299 points last week and fell 258 points yesterday before rallying to close 112 points lower at 8,462.85.
The benchmark Nikkei index fell 28.02 points today, closing at 15,378.91. The index had fallen to as low as 15269.83 yesterday. Today marks the eighth straight day of decline for the Nikkei.
"They do feed off a common cause, which is the pace of change in Japan," said Arun Kumar, senior U.S. equities strategist at Lehman Brothers. "The market is trying to come to grips with what Japan is doing and whether it is going quickly enough to invigorate their economy."
Like the one that preceeded it, the new Japanese government is promising quick action to jump-start the country's ailing economy. But analysts say little substantial action has been taken.
"The market is getting impatient," Kumar said. "Japanese officials have made pronouncements about stimulus packages and tax cuts, but still it has been more talk and not much action."
Investors also fear that Japan may be headed for another major collapse of its financial institutes, comparable to the one in November.
If the U.S. markets head downward, an Asian recovery will be unlikely anytime soon.
Continued recession and currency devaluation in the Asia Pacific region increasingly will impact U.S. companies. A strong dollar makes it more difficult for the region to buy American products and services.
"A longer recession in the Asian markets means demand is going to be slow in coming back," said Kumar. "This will reduce sales for U.S. companies and affect their profits."
Many analysts say they can't yet predict whether the U.S. markets have bottomed out.
"Our economy is still strong, and there's a lot of good news out there," said Raymond James's Silver. "Everyone is concerned about sales to the Asian markets, but that is only one market."
Silver noted that, while everyone has "gloomed and doomed" the Asian sector, the global economy overall remains fairly strong. The Asian markets "are going to dent us, but it won't make us crash," he said.
"Our goods and services are being purchased in Latin America, in the Middle East, and in Europe," Silver added. "We tell our clients to diversify, so if you peg yourself to different markets, if one goes down, the others markets will pick up and hold you."