Internet Issues Slump; Brokers End Bad Month
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Internet stocks ended the week on the down side Friday after inflation fears were renewed by government statistics which showed personal incomes rose more than expected in June. That prompted renewed fears that the Federal Reserve will raise interest rates at its August meeting in an effort to slow down the economy.
Although stocks ended down across the board, the news was particularly shaking to technology stocks and blue chips as the Dow and Nasdaq both turned decidedly negative in the afternoon.
internet.com's Internet Stock Index closed down 8.81, or 1.86 percent, to 473.65, the Nasdaq Composite lost 1.49 to 2,638.52 and the Dow Jones industrial average dove 136.14 to 10,655.15.
The sector's leaders all ended in the red with America Online Inc. (AOL) losing 3-5/8 to 95-1/8, Yahoo! Inc. (YHOO) off 9/16 to 136-7/16, Amazon.com Inc. (AMZN)closing down 1-1/2 to 100-1/16 and eBay Inc. (EBAY) dropped 4-9/16 to 97-11/16.
The day's lone Internet IPO put on a good show. Business Internet provider Digex (DIGX) climbed 5-5/16 to 22-5/16. The company late Thursday sold 10 million shares at $17, raising $170 million. Bear Stearns & Co. was the lead underwriter.
Excite@Home Corp. (ATHM) slumped 1-5/16 to 45-11/16. The company this week met with analysts where AT&T Chief Executive C. Michael Armstrong said the integration of Excite and @Home is largely complete.
In his weekly newsletter, BancBoston Robertson Stephens' Keith Benjamin said AT&T appears to be aggressively pursuing its broadband strategy and should be helped by the proliferation of easy-to-install cable modems.
E-Loan(EELN) recovered a loss of more than 3 points to end up 5/8 to 38-15/16. The company's stock fell 13 percent on Thursday after E-Loan reported second-quarter revenues fell 4 percent sequentially although they were up 270 percent compared to the same period last year.
Modem Media Poppe Tyson (MMPT) shot up 7-7/8 to 29-1/8. The interactive ad agency reported second-quarter earnings of 5 cents a share, trouncing estimates projecting a 6-cent loss. Benjamin raised his rating to "strong buy" from a "buy" and Bear Stearns raised its rating to "buy" from "attractive."
Internet brokers ended the day generally lower, capping a bad month. E*Trade Group Inc. (EGRP) lost 1-7/8 to 30-1/8, Charles Schwab (SCH) dropped 1-55/64 to 44-1/16 and DLJdirect (DIR) tumbled 1-15/16 to 21-1/2.
Friday capped what has been a rough month for leading Internet brokers. E*Trade lost 22.7 percent of its value in July , Schwab gave back 16.6 percent and DLJdirect tumbled 14.5 percent
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