Net Stocks Jump Ahead of Rate Decision
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Investors seemed confident about the future of the U.S. economy Tuesday, shrugging off the possibility of an interest rate hike, sending Internet stocks higher across the board.
Just before noon Eastern, internet.com's Internet Stock Index had jumped 13.96, or 2.18 percent, to 653.75, the Nasdaq Composite had climbed 39.41 to 3,258.95 and the Dow Jones industrial average had leaped 90.53 to 10,851.28.
The Federal Reserve's Open Market Committee is meeting Tuesday to take up the issue of short-term interest rates. A decision is expected shortly after 2 p.m. Eastern. During their last meeting Oct. 5, Fed governors left interest rates unchanged but adopted a tightening bias which means rates will go up if the policymakers see evidence inflation is recurring.
The prospect of an interest rate hike wasn't being felt across the Internet sector, as most of the leaders were higher including Amazon.com Inc. (AMZN) up 4-3/8 to 77-7/8, Ameritrade Holding Corp. (AMTD) climbing 2-7/16 to 28-7/8, Doubleclick Inc. (DCLK) higher by 3-13/16 to 159-13/16, Exodus Commuications (EXDS) up 3-9/16 to 96-7/16 and Go2Net Inc. (GNET) adding 3 to 77-7/16.
American depositary receipts of China.com (CHINA) had jumped 23-3/8 to 124-9/16 on news that the United States and China had signed a World Trade Organization pact making the Asian nation a WTO member. In the past Chinese officials had declared bans on overseas investments in Chinese Internet properties. The new deal will reportedly remove that concern.
A number of analyst upgrades was sweeping through the sector. EarthLink Network Inc. (ELNK) was up 1-1/8 to 50-1/2 after ING Barings initiated coverage with a "strong buy," setting a $60 target. The firm also initiated coverage of Mindspring Enterprises Inc. (MSPG) with a "strong buy" and a $38 price target. Mindspring shares were up 3/4 to 30-13/16.
Lycos Inc. (LCOS) was off 3-1/8 to 56-3/4. Deutsche Bank Alex. Brown raised its price target by $10 to $85 a share. Also, CS First Boston cut its fiscal 2000 earnings estimates to 9 cents but increased its fiscal 2001 estimates to 48 cents a share.
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