Internet stocks dropped across the board Monday as part of a continuing technology sell-off.
Adding fuel to the fire were comments by widely followed analyst Mary Meeker of Morgan Stanley Dean Witter & Co., who warned of a “big correction” for the sector sometime this year. The ISDEX dropped more than 16 percent on the day.
Early in the day, money moved out of tech and into bonds and cyclical blue chips like transports and financial stocks, pushing the Dow Jones Industrial Average up by 270 points before noon. Later in the day, the Dow felt the ripple effect, closing the day down 53.36 points in extremely heavy trading. The NASDAQ index fell 138.19, the second largest decline in its history.
Meeker’s analysis was reported in an issue of The New Yorker published today (the weekly print publication does not publish online). Meeker was quoted as saying she would welcome a correction in high-flying Net stocks “some time this year.” She said only a handful of Internet issues were likely to post good profits in the foreseeable future. Also today, The Wall Street Journal published an op-ed piece by Wharton professor Jeremy Siegel calling Internet stocks over-valued.
Today’s sell-off continued a pattern started late last week. AOL closed down 18 percent on the day, down 24.88 points. Closing at $114.88, AOL is now 62 points below the high of 175 set earlier this month. AOL was the most actively traded of all stocks; more than 54 million shares traded hands.