Shares of online brokerages were caught in a nosedive in midday trading Tuesday following a report that trading volume declined for the first time ever in the second quarter due in part to a decline in Internet stocks.
Things weren’t any better throughout the sector as Internets across the board were drowing in a sea of red.
Just before midday, internet.com’s Internet Stock Index was off 17.96, or 4 percent, to 430.80, the Nasdaq Composite had fallen 25.10 to 2,598.53 and the Dow Jones industrial average had added 34.20 to 10,680.10.
Online brokers were lower across the board, with E*Trade Group Inc. (EGRP) down 4-5/16 to 24-11/16, Ameritrade Holding Corp. (AMTD) off 2-5/8 to 21-3/8, Charles Schwab Corp. (SCH) falling 4-1/16 to 38-3/8, DLJdirect (DIR) down 2-1/4 to 18-7/8 and Southwest Securities Group (SWS), parent of mydiscountbroker.com, plunging 5-1/4 to 36-15/16.
In his latest report on the industry, Credit Suisse First Boston’s Bill Burnham predicted Internet brokers may see their first decline in trading volume in the third quarter. Part of the reason, Burnham said, was online investors tend to favor Internet stocks which are currently in decline.
The number of daily trades at Intenret brokers were only slightly higher in July and “clearly lower” than April’s record, Burnham wrote in a report released Tuesday. Burnham has compiled statistics on the industry since early 1997.
“It is probable, but not definite, that Q3 may witness the first-ever sequential decline in online trading volumes. Weakness in Internet stocks appears largely to blame,” he wrote.
Excite@Home Corp. (ATHM) fell 7/16 to 42-1/2 and Yahoo! Inc. (YHOO) had fallen 6-3/16 to 126-1/8.
Business Week online reported Yahoo! was considering paying more than $17 billion for Excite@Home, although Excite@Home chief George Bell Tuesday denied the report.
Mail.com Inc. (MAIL) was up 1-1/4 to 16-3/8. The company, which provides free e-mail to other Internet sites, reached a deal to provide e-mail services for Dell Computer Corp.’s Dellnet.com.
Cheap Tickets Inc. (CTIX) tumbled 6-1/2 to 45. The company filed to sell another 5 million shares in a secondary offering.
Most of the Internet’s leaders were in a steep decline, with CMGI Inc. (CMGI) falling 7-1/2 to 80-13/16, Amazon.com Inc. (AMZN) off 3-1/2 to 90-1/2, Infoseek Corp. (SEEK) losing 3-3/8 to 34-1/8, eBay Inc. (EBAY) down 6-3/4 to 84-1/2 and Drugstore.com (DSCM) plunging8-3/4 to 36-1/16.
Finally, Quepasa.com Inc. (PASA) was off 1-9/16 to 13-7/16. The Hispanic online community re-appointed Bryan Ross as its chief technology officer. He replaces co-founder Jeffrey Peterson who was ousted on Monday. Quepasa also announced it had filed a lawsuit against Peterson and one other unidentified employee. No reason was given for his termination or the lawsuit.
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