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Yahoo Beats Earnings Estimates

After leading Internet and technology issues lower during the day on Tuesday, Yahoo announced earnings after the bell that beat analysts estimates. The broader market rose on the belief that a speech by Fed Chairman Alan Greenspan signaled no imminent interest rate increases.

The ISDEX fell 23 to 696 to close below the important 700 level. The Nasdaq fell 24 to 3956 after trading above 4000 earlier in the day. The S&P 500 gained 5 to 1480, but turned around at the important 1488 level. The Dow rose 80 to 10,726 on strength in cyclical issues, but had its gains cut in half by the close. Volume rose strongly from Monday, to 980 million shares on the NYSE and 1.7 billion on the Nasdaq. Advancing issues led 16 to 13 on the Big Board, but declining issues led 21 to 18 on the Nasdaq. Ariba will report earnings tomorrow, and Juniper Networks will report on Thursday. The Producer Price Index for June will come out on Friday.

Yahoo fell 4 1/4 to 105 3/4 and traded as low as 99 7/8. The stock broke key support at 111 yesterday. However, the company rose to 117 in after-hours trading. Analysts had been making cautionary comments about the company for weeks, based on weakness in Internet advertising. But Yahoo surprised with earnings of 12 cents per share, beating analysts estimates (10 cents) and the whisper number (11 cents). Revenues ($270 million) and page views (680 million) also topped estimates estimates. In the conference call, Yahoo said less than 10% of its advertisers are financially questionable, and said the Internet shakeout could benefit the company. The company's comments were less cautious than analysts had been predicting. Click here for conference call information.

Yahoo led leading Internet issues lower during the trading day. eBay continued to struggle since falling below critical support at 50, losing 3 15/16 to 44 1/8. However, the stock rose to 46 in after-hours trading. DoubleClick fell 3 3/16 to 28 1/2 during regular trading, a new 52-week low, but rose above 30 in after-hours trading. Merrill Lynch analyst Henry Blodget lowered 2000 and 2001 revenue estimates for DoubleClick and predicted further weakness in Internet advertising. InfoSpace fell 6 5/8 to 43 3/8 on concern that Yahoo may increase spending on wireless initiatives.

CMGI fell 2 1/2 to 36 1/2 during regular trading, but rose above 38 in after-hours trading. The company announced the formation of a joint venture company with Compaq .

Commerce One bucked the downtrend, rising 2 1/4 to 42 on a Thomas Weisel Buy rating.

Art Technology fell 1 7/8 to 108, despite news that it had won a major contract from Kmart. Competitor BroadVision fell 5 to 34 7/8. Vignette fell 5 7/8 to 41 on concerns about compatibility with Java-based and Microsoft application servers, but Salomon Smith Barney dismissed the worries.

Inktomi recovered 7 13/16 to 116 5/16, a day after falling sharply on news that Yahoo had completed its switch to Google and on negative comments in the California Technology letter.

Alteon WebSystems soared 30 3/16 to 131 1/8 after announcing that it will become profitable in the fourth quarter, three quarters ahead of expectations.

GoAmerica rose 1/2 to 13 5/16 on a Chase H&Q Buy rating and $30 price target.

DSL stocks rose after Morgan Stanley Dean Witter began coverage. NorthPoint Communications gained 11/16 to 13 1/2; NorthPoint has been the subject of rumors that WorldCom