Online Brokers Dive on Negative Report
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Shares of online brokerages were caught in a nosedive in midday trading Tuesday following a report that trading volume declined for the first time ever in the second quarter due in part to a decline in Internet stocks.
Things weren't any better throughout the sector as Internets across the board were drowing in a sea of red.
Just before midday, internet.com's Internet Stock Index was off 17.96, or 4 percent, to 430.80, the Nasdaq Composite had fallen 25.10 to 2,598.53 and the Dow Jones industrial average had added 34.20 to 10,680.10.
Online brokers were lower across the board, with E*Trade Group Inc. (EGRP) down 4-5/16 to 24-11/16, Ameritrade Holding Corp. (AMTD) off 2-5/8 to 21-3/8, Charles Schwab Corp. (SCH) falling 4-1/16 to 38-3/8, DLJdirect (DIR) down 2-1/4 to 18-7/8 and Southwest Securities Group (SWS), parent of mydiscountbroker.com, plunging 5-1/4 to 36-15/16.
The number of daily trades at Intenret brokers were only slightly higher in July and "clearly lower" than April's record, Burnham wrote in a report released Tuesday. Burnham has compiled statistics on the industry since early 1997.
"It is probable, but not definite, that Q3 may witness the first-ever sequential decline in online trading volumes. Weakness in Internet stocks appears largely to blame," he wrote.
Business Week online reported Yahoo! was considering paying more than $17 billion for Excite@Home, although Excite@Home chief George Bell Tuesday denied the report.
Most of the Internet's leaders were in a steep decline, with CMGI Inc. (CMGI) falling 7-1/2 to 80-13/16, Amazon.com Inc. (AMZN) off 3-1/2 to 90-1/2, Infoseek Corp. (SEEK) losing 3-3/8 to 34-1/8, eBay Inc. (EBAY) down 6-3/4 to 84-1/2 and Drugstore.com (DSCM) plunging8-3/4 to 36-1/16.
Finally, Quepasa.com Inc. (PASA) was off 1-9/16 to 13-7/16. The Hispanic online community re-appointed Bryan Ross as its chief technology officer. He replaces co-founder Jeffrey Peterson who was ousted on Monday. Quepasa also announced it had filed a lawsuit against Peterson and one other unidentified employee. No reason was given for his termination or the lawsuit.
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