Nets spell relief: R-A-L-L-Y
Infrastructure, B2B shares lead advances
By Bambi Francisco, CBS.MarketWatch.com
Last Update: 5:02 PM ET Dec 5, 2000
NewsWatch
Latest headlines
Get Alerted
NEW YORK (CBS.MW) -- Internet shares recharged Tuesday,
scoring their biggest one-day gain this year, as signs the
month-long presidential deadlock may be nearing an end helped
spark a broad-based tech rally.
Soothing words from Fed Chairman Alan Greenspan, who
spoke midday, helped to extend those gains.
The Goldman Sachs Internet Index rose 15.9
percent, the biggest one-day gain so far this
year and the second biggest one-day gain
ever behind a 16.97 percent surge on Jan. 11, 1999.
Merrill Lynch Internet Holdrs, a basket of the largest capitalized
Net issues, ran up 12 percent. Net leader Yahoo YHOO strutted
16 percent to $43.88.
The Nasdaq Composite turned in its biggest one-day
percentage jump ever, catapulting 274 points, or 10.5 percent, to
2,889. Robert Walberg predicted on Monday that the composite
could reach 3,100 by the end of the year. See Net Sense.
The rally, however strong, was partly driven by investors who
were frantically unwinding their short positions and chasing the
stocks higher.
"There was definitely an election-relief bounce, and that probably
forced the shorts to cover," said James Glickenhaus at
Manhattan-based Glickenhaus & Co.
"But these stocks were oversold and they were cheap. And there
are good buys out there," he added.
Some of those good buys were in the Net infrastructure sector as
they saw the greatest demand in Tuesday's market action.
Merrill Lynch Infrastructure Holdrs shot up 24 percent. Leading
Net infrastructure company Inktomi INKT surged 57 percent to
$34.44. Inktomi was one of the hardest hit issues in November,
declining 59 percent for the month.
Business-to-business stocks also benefited from the day's
enthusiasm, as the sector played catch-up after taking a
significant hit in November. Recall, the Goldman Sachs Internet
Index lost 37 percent in the month, but Merrill Lynch B2B Holdrs,
a basket of the largest business-to-business software and
services companies, tumbled 49 percent.
Merrill Lynch B2B Holdrs rose 26 percent by the close. Shares of
Ariba ARBA jumped 29 percent while Commerce One CMRC
soared 30 percent. Art Technology Group ARTG catapulted 43
percent to $40.94. BroadVision
Stock
12/5/00 gain
Nov. loss
Yr-to-date
Inktomi
Up 57%
Down 59%
Down 61%
Ariba
Up 29%
Down 50%
Down 11%
Commerce One
Up 30%
Down 55%
Down 63%
Art Technology
Up 43%
Down 54%
Down 36%
BroadVision
Up 30%
Down 24%
Down 56%
Critical Path
Up 35%
Down 56%
Down 69%
Helping to pave the way for more cash to be put to use in the
markets are the events in Washington.
The market is getting a psychological boost because it appears
that a resolution to the presidential election is close, said
Briefing.com's Walberg.
But a resolution-relief rally can only drive stock prices so far,
even if a Republican wins the presidency. Conventional wisdom
calls for the less-regulatory stance of a GOP-led White House to
benefit the stock market. But whoever wins will have to govern
from the center, given the divided Congress. Moreover, what
happens in government might not be enough to spark the
economy.
"A resolution isn't going to sell more personal computers," said
Roy Howard, an analyst at Circle T Partners in Manhattan. But
the Federal Reserve's actions will provide the economic relief to
help revive sluggish sales across the board, Howard added.
Indeed, Federal Reserve Chairman Alan Greenspan's
comments carried significant currency in the market. Greenspan,
speaking on banking issues in New York, emphasized the
economic slowdown, leading economists and analysts to believe
that the Fed will ease interest rates sooner. See Market
Snapshot.
Besides infrastructure names, stocks flying out of the gate
Tuesday were shares of wireless application companies and
optical networking companies.
Investors hope to take their chances in sectors that will help build
the infrastructure of the Internet economy.
Wireless companies are expected to spark the next level of
growth opportunities as more people access the Internet on
handheld devices.
Aether Systems AETH gained 17 percent to $63.38. Merrill
Lynch noted that the wireless technology company is down 40
percent in the past two months. The Merrill analyst Virginia Syer
Genereux said that Aether will likely "exceed" her fourth-quarter
revenue estimate and that there is upside potential to her '01
revenue projections.
Wireless application company AvantGo AVGO soared 50
percent to $9.19. Shares are still below their fall IPO price.
InfoSpace INSP gained 27 percent.
Optical equipment companies are in demand on projections that
high-speed access to the Internet will continue to grow. Avanex
AVNX, which makes photonic processors, saw shares jump 35
percent; New Focus NUFO rocketed 42 percent.
ONI Systems ONIS ran up 20 percent.
Past as prologue
If past is prologue, share prices will likely give back some gains
in the days ahead.
As mentioned earlier, the Goldman Net Index jumped nearly 17
percent on Jan. 11, 1999, the biggest one-day gain ever.
On Jan. 12, 1999, the Goldman Net Index fell 6 percent, and
subsequently lost ground for four straight sessions, losing nearly
17 percent in that period.
This column is available in e-newsletter format. Subscribe by
clicking onto our sign up page at Free Market News Reports.
Bambi Francisco is Internet editor of CBS.MarketWatch.com,
based in San Francisco. |
