Fed Official’s Comment Spooks Stocks

Stocks were lower across the board in midday trading Thursday after a Federal Reserve official said it was “premature” to rule out another increase in short-term interest rates this year.

In a wire service interview Thursday, Fed Governor Edward Kelley said the board will carefully examine productivity and wage data before deciding a future course on interest rates.

Just before midday, internet.com’s Internet Stock Index was off 2.45, or .51 percent, to 476.18, the Nasdaq Composite was off 19.81 to 2,730.99 and the Dow Jones industrial average had dropped 134.25 to 10,803.63. The majority of the Dow’s dip was a steep drop in shares of Sears Roebuck & Co. which Thursday reported sluggish August sales.

Movers included Go2Net Inc. (GNET) which had jumped 5-19/32 to 65-27/32. Paine Webber Thursday initiated coverage of Go2Net with a “buy” rating and set a $96 price target.

Beyond.com Corp. (BYND) had climbed 1-15/16 to 18-5/8. The company won a government contract which could be worth up to $30 million to supply Corel Corp. software to the U.S. Department of Defense.

iVillage Inc.(IVIL) had fallen 7/16 to 35-1/2. The company late Wednesday purchased privately-held FamilyPoint.com for about $26 million in cash and stock.

Priceline.com Inc. (PCLN) was off 1-19/32 to 64. Priceline on Thursday expanded its “name-your-price” new car shopping service.

E-Loan Inc. (EELN) was off 1 to 32-1/16 after falling as low as 29-9/16 earlier in the session. Sutro & Co. Thursday initiated coverage with a “hold” rating.

Among sector leaders, Amazon.com (AMZN), whose shares split 2-for-1 after Wednesday’s close, was up 1-5/8 to 61-3/16, America Online Inc. (AOL) had slumped 1/4 to 90-5/8 and eBay Inc. (EBAY) was off 3/16 to 121-3/4.

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