Credit Suisse First Boston analyst Kevin McCarthy reaffirmed his "Hold" rating on Apple stock yesterday.

His announcement comes days after Apple's decision to slash prices on its professional Power Macs and PowerBooks. The news also emerged as research firm PC Data announced that US retail and mail order PC sales fell 24 per cent in December. This marks the largest year on year decline ever in this market, says PC Data - and the fifth successive month of market decline.

A Reuters news bulletin quotes analyst Roger Lanctot: "It looks like the market is hitting the reset button on the PC market. They have got to get to lower pricing levels, or a different configuration, or something, because what they are doing now is not working." For the year, PC sales in the retail and mail order markets fell 0.8 per cent, or 10.1 million units, compared to 1999.

On Apple's decision to launch a salvo in the looming PC industry price war, McCarthy said: "We believe Apple's move represents the first of several significant pricing actions on the part of PC vendors as they work through inventory left over from a weak fourth quarter in 2000."

Apple's stock rose $1.5 yesterday to close at £16.375. This partly reflects positive expectations of innovative new product announcements at Macworld Expo next week.

Other manufacturers in the PC space suffered negative calls yesterday. Salomon Smith Barney reduced expectations on Hewlett-Packard and IBM. Lehman Brothers reduced its twelve-month targets for Intel and Dell significantly - forecasting earnings per share of $1.30 and $1 respectively. Dell closed at $17; Intel at $30.125.

The Nasdaq gained 14.17 per cent over the day as investors reacted positively to the Federal Reserves decision to cut interest rates by 0.5 per cent.