SAN FRANCISCO (01/26/2000) - Sell-offs like the one seen in the technology sector Monday often used to signal the start of something bigger and the beginning of a trend, but not anymore. Internet stocks and the tech sector bounced back with a late-day rally Tuesday as bears were unable to maintain Monday's momentum.
Internet stocks languished through a lackluster session before bouncing back.
There was no news to account for the turnaround, but the Net sector's fortunes appeared to turn along with the performance of Yahoo, which closed up 21.25, or 6.6 percent, at 345.56 after trading as low as 316.25. Yahoo has attracted a heavy dose of short selling since reporting earnings two weeks ago, and some of those shorts may have been covering as the stock traded higher. The portal's recovery helped TheStreet.com's Internet Sector index close up 18.71 points to 1146.48. The Dow rose 21.72, or 0.2 percent, to 11029.89. The Nasdaq jumped 71.33 points, or 1.74 percent, to 4167.41.
Market participants were as confused as anyone as to what was going on or what the direction of the market is. Earnings have been solid for the most part, and a few stocks saw post-earnings gains today. But the Net sector typically sees some selling after the earnings season is complete, while the Federal Reserve remains a wild card. Fed Chairman Alan Greenspan's testimony before Congress Tuesday was canceled due to weather, but will likely play a role in Wednesday's session.
The late-day rally, along with a couple more positive earnings reports, could get the Net sector on solid footing in tomorrow's session should Greenspan not shake things up. EBay was higher in after-hours trading after reporting fourth-quarter earnings of 4 cents a share, which was 2 cents better than Street estimates, though the market was still digesting details of the report.
Ahead of the report, eBay closed up 1.13 at 137.5.
RealNetworks also was trading higher after-hours after beating estimates with a gain of 7 cents per share versus a 5-cent forecast. However, what really rocked the stock was news that Real approved a 2-for-1 split. RealNetworks closed up 11 at 157.88 ahead of its report.
Among the best-performing Net stocks during the session was About.com after the company bested earnings estimates Monday night. The Internet media company closed up 25.94, or 41 percent, at 89 after reporting a loss of 57 cents a share for its fourth quarter versus the 81-cent loss estimate from First Call/Thomson Financial. It compared to a loss of 75 cents a year earlier.
Following the numbers, Donaldson Lufkin & Jenrette raised its six- to 12-month price target on the stock to $150 from $100 and said it should be a core holding in an Internet portfolio.
Homestore.com also logged strong post-earnings gains, closing up 25.75, or 27 percent, at 122.25. And Foundry Networks added 8.5 points, or 6 percent, at 152 after a strong earnings report.
Elsewhere in the sector, Ask Jeeves closed up 5 points to 104. The search-and-find service said today that it had purchased privately-held Direct Hit, a developer of Web search technology, in an all-stock deal valued at $506.9 million.
Business-to-business stocks were also strong performers, and should stay that way as long as the market does not fall apart. Kana Communications closed up 16 at 236. VerticalNet finished up 20.5 at 260.5. Finally, Akamai closed up 17.25 at 279.31.