SAN FRANCISCO (08/09/2000) - The old economy proved it's still got some kick Tuesday as the Dow rose 1.01 percent, or 109.88, to close at 10976.89. The increase is broadly the result of stronger-than-predicted second-quarter productivity in the U.S. economy. Analysts had expected a 4.3 percent annual rate and were pleasantly surprised with the actual 5.3 percent result. This news also bodes well for interest-rate watchers, as Federal Reserve chief Alan Greenspan is unlikely to raise rates now that inflation worries are placated by strong productivity.
The Nasdaq, on the other hand, fell 0.37 percent, or 14.44, to close at 3848.55. Analysts suspect that this fall in part reflects a bit of profit-taking indulgence after the index's three-day gain. TheStreet.com Inc.
(TSCM) 's Internet index fell 0.38 percent, or 2.89, to close at 760.85.
Merrill Lynch & Co. Inc. analyst Henry Blodget's downgrade of 11 Internet companies' ratings on Monday added stress to the sector.
DoubleClick Inc. (DCLK) , one of the stocks Blodget dinged, fell 9.87 percent or $3.81 to close at $34.81. Other downgrades were Barnesandnoble.com, which fell 28 cents, or 5.42 percent, to close at $4.91; Etoys, which was down 1.52 percent to $4.06; iVillage Inc. (IVIL) , which dropped 5.56 percent to $6.38; and Webvan, which was down 2.7 percent to close at $4.50.
However, a few companies bucked Blodget's remarks. Quokka Sports (QKKA) rose after it announced a partnership with NBC to host Internet coverage of the Olympic Games. Its stock closed up 5.15 percent to $6.38. Safeguard Scientifics (SFE) closed at 2.35 percent to $27.19.
Cisco posted impressive gains in after-hours trading after releasing better-than-expected second-quarter earnings. Its stock spiked $2.56, to $68.06, shortly after the market close. But then it fell back again after Don Listwin, executive VP of Cisco's corporate marketing, service provider and consumer lines of business, announced that he is resigning to join a startup.
The other networking giant, Nortel Networks (NT) , surged up in late-day trading to close at $80.50. Internet infrastructure companies also looked strong: Ariba (ARBA) rose $7.50, or 6 percent, to close at $142.50; Copper Mountain Networks (CMTN) rose 11.63 percent to end at $78.42; and Juniper Networks (JNPR) closed up 4.39 percent to close at $158.94. Software giant Microsoft (MSFT) closed up $4.13, or 5.9 percent, to $74.13, after announcing the re-commencement of a stock buy-back program.
TheStreet.com closed up 20.5 percent, or $1.31, to close at $6.06 after it sold a 5 percent stake at a premium price to Paul Allen's Vulcan Ventures and Go2Net (GNET) for 7.5 million dollars. Qualcomm closed down 3.93 percent, or $2.50, to $61.06, after investors reacted negatively to the company's taking a larger chunk of ChipPAC's pre-public shares. ChipPAC has recently amended its IPO terms with the SEC, resetting it's offering price to less than half of what it previously expected. NetworkSolutions fell $4.25, or 2.07 percent, to close at $201.25.