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eBay Slumps on Downgrade

By Paul Shread   |    August 24, 2006
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eBay shares lost 4.5% Thursday on a downgrade, while the rest of the market treaded water ahead of a major speech by Fed Chairman Ben Bernanke.

Piper Jaffray downgraded eBay to 'underperform,' saying the company is facing rising costs and declining buyer activity.

"We believe the core problem is with lack of activity from buyers, not sellers, and thus eBay's efforts are unlikely to bear fruit," wrote analyst Safa Rashtchy, who said eBay "will be forced to spend heavily in sales and marketing or product development, or both, to bring buyers back to the site."

Creative Technology was a big mover on the upside, gaining 15% on news of a $100 million settlement with Apple . Apple managed a small gain on the day despite a notebook battery recall.

Opsware lost 9% after beating estimates but lowering third-quarter guidance.

The broader market rose slightly on new home sales and durable orders reports that provided fresh evidence of a slowing economy, raising hopes that the Federal Reserve is done raising interest rates. Traders are hoping for Bernanke to confirm that view on Friday.

The Nasdaq rose 2 to 2137, the S&P 500 added 3 to 1296, and the Dow tacked on 6 to 11,304. Volume declined to 1.93 billion shares on the NYSE, and 1.45 billion on the Nasdaq. Advancers led 17-15 on the NYSE, and 15-14 on the Nasdaq. Upside volume was 46% on the NYSE, and 69% on the Nasdaq. New highs-new lows were 71-49 on the NYSE, and 48-69 on the Nasdaq.