RealTime IT News

Covad Gains, Overstock Continues Slump

The markets rebounded Wednesday on news of increased consumer confidence. But investors remained cautious, as oil prices climbed, and tech stocks remained flat.

After falling to a two-month low on Tuesday, the Dow Jones Industrial Average jumped 18.49 points higher on Wednesday to close at 10796.26. The NASDAQ Composite Index rose 2.05 to 2.228.94.

Stock prices came out of the gate strongly on Wednesday morning on a report by the Conference Board that consumer confidence in the economy leaped forward in December. The renewed confidence came because of declining oil prices, which are near levels posted before Hurricane Katrina.

However, later in the day, oil prices began to climb, when Iran urged the Organization of Petroleum Exporting Countries to begin cutting oil production by as much as 1 million barrels a day.

Covad Communications was a leading tech stock gainer, after agreeing to settle a long dispute with Verizon over DSL line-sharing. Covad stock gained 29 cents to 96 cents a share, or a 43 percent increase.

The news wasn't nearly as good for Internet retailer Overstock.com , which fell for a second straight day. After declining 7.40 percent on Tuesday, Overstock tumbled another 7.6 percent on Wednesday, to close at $28.79.

Market watchers blamed Overstock's Tuesday decline on a report that fourth-quarter growth had slowed to two times the industry average, rather than the three to four times the average that the company had posted in the past.

The slump continued Wednesday, when Piper Jaffray cut its rating on Overstock to "underperform" from "market perform." The analyst said, "We believe it could prove very difficult for Overstock to achieve profitability under its current business model."

Morgan Stanley's high-tech index added 0.72 to 529.18.