RealTime IT News

Respite or Rally?

With 38 of 50 companies leading the charge, internet.com's Internet Stock Index fought back Thursday, ending five consecutive days of losses by closing up 28.44, or 7.02%, to 433.57.

While Thursday's percentage gain was larger than any single-day percentage loss since July 28, the ISDEX is still below Monday's average price, and well below last Friday's (July 30) price.

Closing DatePricePrice ChangePct. Change
Aug. 5433.57+28.44+7.02%
Aug. 4405.13-22.48-5.26
Aug. 3427.61-21.15-4.71
Aug. 2448.76-14.89-3.21
July 30473.65-8.81-1.86
July 29472.46-19.92-4.05

Overall, of course, the ISDEX is up this year, but the percentage gain in 1999 has dropped from 40% through the July 29 close to 28% after Thursday's trading ended. Through Thursday, the ISDEX was 35% below its peak this year of 664.5 on April 12.

As we stated last week, it is impossible to say whether the recent slump in Internet stocks has fully played out. Thursday's strong rally is encouraging, especially as it came on a day when the federal government released a report showing lower productivity and rising labor costs in Q2, a combination that economists warn can trigger inflationary pressures.

But all bets may be off until later in the month, when Federal Reserve Chairman Alan Greenspan is expected by many to announce a hike in interest rates.

While such a rate increase concerns some investors, others argue that the Internet stock market already took the Fed action into account during its steep plunge of the past three weeks.

With the Q2 earnings season behind us and an anticipated increase in fall e-commerce activity several weeks away, we may be in for continued volatility for the rest of August.

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