Ariba Soars In After-Hours Trading

Ariba soared in after-hours trading Wednesday after beating earnings estimates, capping a day in which Internet stocks gained more than 8%.

The ISDEX soared 57 to 753, a day after closing just below the important 700 level. The Nasdaq bolted 143 to 4099, taking out key resistance. The S&P 500 added 12 to 1493, above the important 1488 level, and the Dow added 56 to 10,783. Volume rose to 1 billion shares on the NYSE and 1.76 billion on the Nasdaq. Advancing issues led 17 to 11 on the Big Board and 24 to 15 on the Nasdaq. Juniper Networks will report tomorrow, as will CNET. For more on earnings, visit our new earnings calendar and reported earnings. The Producer Price Index for June will come out on Friday.

Ariba soared in after-hours trading to as high as 118 after closing at 103 1/2. The company reported a third-quarter loss of 5 cents a share, 3 cents better than expected. The move completes the stock’s objective of 117 after breaking out at 85 recently.

B2B stocks were strong across the board in Wednesday’s trading, after Jefferies & Co. made positive comments about the group. Commerce One added 9 3/8 to 51 7/8, VerticalNet bolted 5 15/16 to 46 1/4, PurchasePro soared 7 3/8 to 40 1/2 and FreeMarkets gained 7 7/8 to 45 7/8.

But the real star of the day was Yahoo , which led Net stocks higher in a broad, sharp advance, rising 19 7/16 to 124 15/16. 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. In the conference call, Yahoo said that less than 10% of its advertisers are financially questionable, and said the Internet shakeout could benefit the company. The company did not reveal how much of its revenues come from Internet companies. The company’s comments were less cautious than analysts had been predicting. In an interview on CNBC, Yahoo Chairman Timothy Koogle would not say whether the company’s margins will decline, a concern of analysts who expect the company to increase spending in the third or fourth quarter. Koogle said analysts should expect margins in the 34-38% range. Morgan Stanley Dean Witter analyst Mary Meeker raised her revenue and earnings projections for the company, but did not raise her Outperform rating. For more on Yahoo’s earnings, click here.

Internet stocks rebounded strongly on the Yahoo news. eBay soared 8 11/16 to 52 5/8, back above the important $50 level. DoubleClick recovered 3 to 31 1/2. InfoSpace regained 2 3/4 to 46 1/8.

Advertising-supported portals rose strongly. AskJeeves added 1 7/16 to 15 7/16, CNET soared 7 11/16 to 29 1/8, and GoTo bolted 5 1/4 to 15 7/16. Donaldson, Lufkin and Jenrette said it expects an upside earnings surprise from GoTo. For more on GoTo, click here.

Interwoven gained 22 1/16 to 149 3/16 on a CS First Boston Buy rating after the acquisition of wireless and XML technology developer Neonyoyo. CSFB said it expects the company to exceed estimates.

PSINet gained 2 1/8 to 22 1/4 despite a DLJ downgrade from Top Pick to Buy on conc

ern about the company’s earnings.

Exodus gained 4 15/16 to 41 15/16 on news that GlobalCrossing may sell its web-hosting business to the company, and on news of an alliance with Alteon WebSystems .

Some technical comments on the market: The Nasdaq and S&P 500 both broke through important resistance today, and if they can hold above these levels (4073 and 1488, respectively), stocks should be able to rally here. The S&P 500 moved above 1488 resistance this morning, the tip of the right shoulder of that index’s bearish head-and-shoulders formation. Next up is 1508, the 78% retracement level. Interestingly, the index once again turned back when the September futures hit 1508. To the downside, the lower boundary of the head-and-shoulders is around 1380. The Nasdaq took out its previous reaction high of 4073 and the 50% retracement level of 4087, giving the index potential room to 4326, based on the 253-point trading range the index has been mired in since turning back at 4073. Interestingly, the 62% retracement level is 4337, but before getting there, the index must first fill a gap down from 4188 to 4094 from April 11. A break of 4100, which we ended a fraction of a point under today, would pretty much take out all three numbers (4073, 4087 and 4094). The index began the year at 4069, so it is back in positive territory on a closing basis for the first time since April 10. Recent support on the Nasdaq is in the 3820-3830 range, and key support is at 3725 and 3585. The ISDEX broke key support at 700 yesterday, but that break was suspect, given that analysts’ concerns about Yahoo were either wrong or premature. Yahoo has given the index a much-needed boost, but remains in a broadening pattern. The ISDEX has been consolidating at the top of its three-month trading range, which is a plus, but its recovery has been halted in the 790 area, just above the 38% retracement level from the high (1130) to the low (560). A move above 790 would be bullish, while a substantial break of 700 could give the ISDEX room to 600. Today’s action was very positive, and could set up a test of 790. The Dow is back above its 200-day moving average (10,747) and has broken its downtrend since reaching 11,100 in late April, both positive developments if the index can hold them. Next resistance is 10,863. The Dow may have broken its bearish diamond pattern yesterday, but volume was not spectacular. And don’t forget, we want to break the diamond by 3% on high volume; that would put the index north of 11,000, the point at which a pure drawing of the lines would place the Dow diamond’s upper boundary anyway. And finally, the advance-decline line on the NYSE has been steadily improving, and the index today set a new all-time high.

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