RealTime IT News

Stocks Rally, Then Fade As Fed Leaves Rates Unchanged

Stocks initially rallied but then drifted lower after the Federal Reserve voted to leave rates unchanged. The Fed said it sees signs that the economy is slowing, but nonetheless maintained its tightening bias.

The ISDEX gained 15 to 730. The Nasdaq rose 81 to 3940, the Dow added 23 to 10,527, and the S&P 500 gained 4 to 1454. But all four indexes finished off their best levels of the day. Volume rose to 1.06 billion shares on the NYSE and 1.65 billion shares on the Nasdaq. Breadth was positive, with advancers leading 17 to 11 on the Big Board and 23 to 16 on the Nasdaq.

Yahoo! declined 2 9/16 to 123 3/8 on news that it will buy pre-IPO EGroups, an e-mail service provider, for more than $400 million in stock. It was the second time this week that a company that had been slated to go public was bought out. Ariba announced on Tuesday that it is buying pre-IPO SupplierMarket.com.

The marriage between Media Metrix and Jupiter Communications announced yesterday continued to get a lukewarm reception. Media Metrix fell 2 3/16 to 21 3/16, while Jupiter declined 2 3/16 to 18 7/8. For more on the story, click here.

S1 Corp. was the latest Net stock to rebound from recent woes, leading the ISDEX higher with a gain of 4 1/16 to 24. CMGI rose 4 5/8 to 49 3/8. Amazon.com added 1 1/2 to 38 after CEO Jeff Bezos defended the company and said it will be able to fund operations from cash flow by the end of the year. Lehman Brothers bond analyst Ravi Suria said recently the company will run out of cash in the first quarter of 2001. ABN Amro initiated coverage of Amazon with a Buy rating and $50 price target.

Internet infrastructure plays resumed their leadership. Juniper Networks rose 9 9/16 to 136 after being named one of Lehman Brothers' 10 annual Uncommon Values. Networking stocks figured prominently on the list, with Cisco , Nortel and Tellabs making the cut. Corning rose 11 1/2 to 264 1/2, SDL Inc. gained 9 7/8 to 287, and JDS Uniphase tacked on 3 1/2 to 122 1/2, stemming a sharp recent decline.

Companies continued to announce wireless Internet strategies. RealNetworks added 4 11/16 to 48 7/8 on news of an alliance with Nokia to provide Internet media technology for future mobile devices.

Phone.com edged up 1/16 to 68 1/16 on news that ALLTELL will license the company's UP Link Server to enable Internet access for wireless customers. CS First Boston reiterated Strong Buy.

AskJeeves gained 1 1/16 to 17 7/8 on news that its natural-language answering service is now available to Palm users.

24/7 Media rose 1 1/4 to 14 3/8 after unveiling its 24/7 Media Wireless Network that will enable advertisers to deliver ads via the company's wireless ad server.

Aether Systems continued to gain on news of its wireless alliance with Microsoft , up 5 to 201. Merrill Lynch reiterated its Buy rating and $350 price target.

After the market closed, Palm announced earnings of 3 cents per share, beating estimates by 2 cents. Palm, which lost 1/2 to 26 3/8 in regular trading, rose more than $1 in after-hours trading.

Kforce.com soared 1 5/8 to 6 7/8 after Goldman Sachs added the beaten-down company to its Recommend List, based on valuation. Goldman lowered FY 2000 earnings estimates to 43 cents a share from 50 cents, and lowered its price target from $20 to $15. Goldman expects a long-term growth rate of 22.5%.