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Traders Spooked By Strong Economy, Weak Earnings

Traders were spooked Friday by a stronger than expected report on domestic growth, raising the specter of another Fed rate hike in August. Lingering worries about corporate profits carried over from Nokia's earnings warning on Thursday, sending Internet and technology stocks sharply lower.

The ISDEX fell 38 to 693. The Nasdaq lost 179 to 3663. The S&P 500 dropped 29 to 1419, and the Dow fell 74 to 10,511. Volume declined slightly, to 979 million shares on the NYSE and 1.76 billion on the Nasdaq. Decliners led by 2 to 1 on the NYSE and 28 to 11 on the Nasdaq. Second-quarter GDP came in at 5.2%, well above 3.7% estimates, but inflationary measures were more in line with estimates. Michigan consumer sentiment came in slightly above estimates. For earnings reports, visit our earnings calendar and reported earnings.

Internet advertising firms were higher on news of a settlement on consumer privacy issues with the Federal Trade Commission. DoubleClick , which spearheaded the plan, gained 2 27/32 to 36 29/32. 24/7 Media added 7/8 to 12, and Engage rose 1 5/32 to 10 7/16. CS First Boston reiterated Strong Buy on DoubleClick, saying the agreement allows the company to maintain its business plan.

A "takeunder" of Alteon WebSystems didn't help the mood. The stock lost 14 11/64 to 128 13/16 despite news that it will be acquired by Nortel . Before Nortel's stock dropped, the offer was barely above ATON's closing price on Thursday.

JDS Uniphase fell 12 13/64 to 116 13/16, a day after closing back below its recent breakout point of 130-131.

EarthLink was downgraded by Morgan Stanley Dean Witter to Neutral a day after beating estimates by 7 cents with a 29-cent loss. The stock fell 2 1/64 to 11 1/2.

eToys beat estimates by 2 cents with a 37-cent loss. The stock added 3/32 to 5 5/32 despite a Goldman Sachs downgrade to Outperform from Trading Buy.

Clarent beat estimates by 6 cents with 4-cent earnings. But the stock got crushed, off 29 1/8 to 45.

Beyond.com beat estimates by 6 cents with a 29-cent loss, but the stock lost 7/32 to 1 3/16. Buy.com beat estimates by a nickel with an 18-cent loss, but fell 11/32 to 4 1/32. iVillage missed by 6 cents with a 94-cent loss, and announced that President Doug McCormick would replace CEO Candace Carpenter, who will remain as chairwoman. The stock lost 9/32 to 6 1/4. EMusic.com beat estimates by 3 cents with a 34-cent loss, but dropped 23/64 to 2 1/4.

HotJobs.com bucked the trend, rising 13/16 to 17 after beating estimates by a penny with a 31-cent loss. SG Cowen upgraded the company from Buy to Strong Buy. STC beat estimates by 8 cents with a 16-cent loss, and the stock rose 3 11/16 to 26 3/4.

Breakaway Solutions lost 4 to 24 despite beatings estimates by 2 cents with a 2-cent loss. InterTrust reported in line with estimates at a 13-cent loss, and the stock declined 2 1/2 to 14. DSL.net beat by 2 cents with a 45-cent loss, but the stock dropped 1 5/8 to 6. Digital River lost 27/32 to 6 3/8 after beating estimates by a penny with a 39-cent loss.

FreeShop.com lost 1/16 to 3 9/16 despite news of a 10% stock buyback. Verio rose 5/16 to 54 1/2 on news that NTT has extended its tender offer until August 14.

It was a good day for IPOs. Corvis priced at 36, opened at 95, and closed at 85 3/8. WebEx priced at 14, opened at 18, and closed at 33 1/16. Avici Syste



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