RealTime IT News

Amazon.com Helps Boost Market

After frittering away early gains by mid-afternoon, stocks rallied down the stretch Monday to post modest advances.

Tech and Internet stocks got a big boost before the opening bell from Amazon.com's preliminary Q1 numbers, which showed the e-tail giant reducing its net loss by 17% from the year-ago quarter. But by 1:30 p.m., the major U.S. exchanges and key indexes were underwater. Only a broad rally in the final 90 minutes of trading prevented a disappointment, if not a disaster.

Overall, 'Net tickers led the day, with internet.com's Internet Stock Index, or ISDEX, climbing 9.47, or 5.4%, to 185.49. Amazon.com was the top ISDEX performer, rising 33.2% to $11.15. Forty of the 50 ISDEX member stocks were up Monday.

The Dow Jones rose 54.06, or 0.6%, to 9845.15, while the Nasdaq gained 25.35, or 1.5%, to 1745.71. The S&P 500 was up 9.16, or 0.8%, to 1137.59.

Eleven of 13 Internet sectors has more advancers than decliners. The Search/Portal group's dozen members split down the middle, while losers had the edge in the Internet services sector. For full sector breakdowns, visit WSRN's Internet sectors page.

Amazon.com reported its net loss narrowed in Q1 to less than $255 million from $308 million in the year-ago quarter, thanks in large part to cost-cutting measures such as layoffs and better inventory control. But Amazon.com also increased revenue to $695 million from $574 million in Q1 2000, a 21% gain.

Amazon.com officials said the company still intends to meet its goal of profitability, excluding merger-related and other costs, by this year's fourth quarter. I'll discuss this further in Tuesday's Morning Report.

(For earnings reports, visit our earnings calendar and our reported-earnings page. For after-hours quotes and news, visit After Hours Trading.)

One of the biggest gainers Monday was NBC Internet , which soared 42.7% to $2.14 after General Electric's NBC television unit, which already owns 38.6% of NBCI, said it would buy the rest for $85 million, or $2.19 per share. Whoa! I see 5 cents more running room!

Acquisition worked similar magic for shares of music download site EMusic , which climbed 22.7% to 54 cents after Universal Music Group said Monday it was buying EMUS for $24.6 million, or 57 cents per share. EMusic had announced last Thursday it had signed a letter of intent to be purchased, but didn't reveal the buyer. EMUS closed last Wednesday at 22 cents.

Here's some technical analysis from Paul Shread:

April 9, 4 p.m.: The Nasdaq is trapped in a very tight range here, between an up gap from 1638-1700, and a down gap from 1786-1757, both of which were created in the last week. A move above 1757 or below 1700 should dictate short-term direction. The Nasdaq is also not too far from very important resistance, its January downtrend line at about 1800 (first chart). A move above that line would likely mean some sort of bottom for the techs. That line could be as low as 1775 for tomorrow, but we'll continue to use 1800 to leave room for error. Also, the big-cap Nasdaq 100 is finding support at its 1990 trendline at 1348, a critical support for the whole market (second chart). Every other trendline from the 1990s has been broken; can that one survive? The S&P 500, meanwhile, continues to meet with sellers at its main downtrend line from late January (third chart). That line is declining at about 5 points per day, so we'll put it at 1142 for tomorrow. 1120 is first support, and then 1090. The Dow continues to run into resistance below the 9992 level (fourth chart). A close above 10,000 would be a good sign for the broader market. First strong support is 9687, then 9500 and 9400. And finally, a look at GE (fifth chart). The stock's recent top appears to be a head-and-shoulders pattern, which has been a devastatingly accurate pattern in technology stocks over the last year. The pattern projects a minimum move on GE to about 33.50, or another 20% down from here. But as we saw in technology, a head and shoulders top at the end of a long bull run usually means a move well beyond the minimum downside projected by the pattern. Given that the Dow is consolidating after a 1,750-point drop, another 1,750-point decline in the Dow from the secondary peak of 10,000 would take the index to its 1984 trendline at 8250 (sixth chart). The market could just as easily reverse upward from here, but the Dow and GE charts give blue chips significant potential downside.