Priceline.com was the latest Internet company that beat earnings estimates but failed to impress investors, in the process leading the Net sector lower.
The ISDEX fell 16 to 785, just below its recent breakout at 790, and the Nasdaq declined 18 to 4075. The S&P was off a point to 1479. But the Dow added 18 to 10,751 on strength in Merck. Volume declined to 385 million shares on the NYSE and 623 million on the Nasdaq. Declining issues led 14 to 11 on the NYSE and 19 to 16 on the Nasdaq. Aether Systems, Akamai, FreeMarkets, GoTo.com, and MP3 are among the companies reporting earnings tonight. The major economic reports for the week are the second-quarter Employment Cost Index on Thursday and the GDP on Friday.
Priceline.com reported a first-quarter loss of 1 cent, 2 cents better than expected, and revenues rose more than 200% to $352 million. The company lost 10 cents in the year-ago quarter. Merrill Lynch said the company appears to be headed for profitability, but investors were unimpressed by the results, sending shares of Priceline lower by 5 1/8 to 34 15/16.
Internet infrastructure plays were strong on news of a potential $100 billion deal between Nortel and Corning
. Corning fell 25 7/8 to 257 7/8 on news that Nortel may sell the company its optical parts unit in exchange for a greater than 50% stake in Corning.
New Focus , up 13 3/16 to 154 1/2 and EXFO
, up 7 13/16 to 87 1/16, were among the stocks rising on the news. JDS Uniphase
rose 1 9/16 to 136 3/8 but down from an intraday high of 140 1/2, extending Friday’s breakout on better-than-expected earnings news from merger partner SDL
. JDS Uniphase is being added to the S&P 500.
Tut Systems continued its move from a breakout on Friday on better-than-expected earnings, adding 10 3/16 to 95 11/16, but down from an intraday high of 99 1/2.
Two recent IPOs received positive comments from numerous brokerages as their post-IPO quiet period expired. Genuity added 1/16 to 10 3/16 on the comments, but Stratos Lightwave
declined 3 1/2 to 45 1/2.
ZDNet preannounced second quarter earnings that were a penny better than expected. The stock added 7/16 to 17 3/4, and CNET
, which is buying the company and parent Ziff-Davis
, added 9/16 to 31 3/8.
VerticalNet gained 1 5/8 to 57 on news of completed ventures with Softbank and British Telecom. Goldman Sachs made positive comments ahead of the company’s earnings report on Wednesday.
GoTo.com rose 2 3/4 to 19 15/16 on news of an alliance with CompuServe.
EMusic.com gained 1/2 to 2 5/16 on news that it will launch a subscription service giving customers unlimited access to MP3s.
drkoop.com gave back 5/32 to 1 7/16 a day after receiving a merger offer from MilleniumHealth. For an interesting take on the offer, click here.
Some technical comments on the market: The Nasdaq is just below critical support of 4050, and the S&P 500 is just above its critical level of 1470. The Nasdaq broke its large bearish rising wedge to the downside this morning; the lower wedge boundary had risen to just under 4100. However, the break came on light volume, and the index is finding some support at its 4050 bottom of last week, so there’s som
e hope for a turnaround here. If the selling accelerates, the first support should be found in the 3950-4000 area, but the break gives us potential downside to 3042, where the wedge began in May. To the upside, the index needs to get back above 4100 quickly to negate the break. The S&P is just above its rising wedge boundary of 1470; a clean break of that level could take the index back to where the wedge began, at 1361 in May. In short, the Nasdaq has broken the uptrend of its two-month rally, and the S&P could be right behind.
The ISDEX appears to have negated its recent breakout this morning, falling back below 790. To the downside, 700 has proven strong support; a break of that level could carry the ISDEX all the way to 600. To the upside, the index turned back recently at 840, just below its 50% retracement level of 845. If Net stocks can get past 850 resistance, they could go to 880. The Dow is forming a 200-point trading range bound by 10,675-10,875. A break of either level should determine direction on the Dow. The upper boundary of the Dow’s bearish diamond pattern is 11,000.
