Net Mania Gets a Cold Shower
By Nelson Schwartz
Finally. After weeks of predictions (including my own), it seems
like the frenzy for Internet stocks may be cooling off. That, along
with fears about Brazil and China's economic stability, sent stocks
skidding Thursday. The NASDAQ fell the most, plunging 70.77, to
2344.72, or 2.9%. The Dow suffered a more modest loss of 71.83, to
close at 9264.08, while the S&P 500 dropped 21.46, to 1235.16.
Here's what we've been following:
THE BEGINNING OF THE END?... Okay, so maybe it's a little early to
predict that Net mania is over. Still, the losses in the big Net
names must be pretty painful for all the newbies who got in at the
high. Yahoo dropped $22 3/16, to $265, which is nearly 40% below its
high of $415 on Jan. 11. Amazon.com fell $7, to $106 (Henry
Blodget's pre-split target of $400 now looks ambitious again,
doesn't it?), and eBay fell a whopping $32, to $181 3/4. Ubid was
yet another big loser, plunging $5 5/16, to $68 1/2, while Network
Solutions sank $6 1/4, to $169 1/4. In the past, individual
investors have rushed to buy the dip on days like this. Let's see if
that happens this time--I wouldn't bet on it.
NO RELIEF.... The losses weren't as severe as in the Internet sector
but the big boys also took it on the chin Thursday. Microsoft, which
has been incredibly strong this week, dropped $4 5/16, to $158 5/16,
while Intel eased $4 3/4, to $133 1/2. Other tech losers included
Lucent, down $8 9/16, to $106 15/16, and Micron, off $3 3/16, to $69
13/16. I wouldn't feel bad--these stocks have had an incredible run
lately, so a little profit-taking is normal, if not downright
healthy.
THE REAL WORRY.... Unlike the devaluation in Brazil, a reduction in
the value of China's currency would be a big negative for U.S.
markets. I'm not saying Brazil isn't a problem, it's just that China
looms much larger in investor psychology. Moreover, Japan is heavily
invested in China, and Japan has big problems of its own. Looks like
Asia may not be last year's worry, after all.
Loose Change
IBM, Sun beat earnings. How's that for a ray of light? After the
close, both reported earnings that beat the consensus. Sun also
declared a 2-for-1 split.... Seems like there was some
disappointment out there that MSFT didn't split when it announced
earnings earlier this week. Why are people so focused on splits? I
think it's pretty silly.... Normally safe havens, even the drug
stocks were weak on Thursday. Merck fell $2 9/16, to $146 15/16,
while Pfizer dropped $3 5/16, to $116 3/8.... Memo from Amy: To all
the readers who are angry that she knocked Atlanta's chances in the
big game, she points out that Sports Illustrated predicts Denver by
7.... Thanks to everyone who responded to my query regarding their
experiences with Net stocks. I'll share the stories here soon....
Look for Serwer to wrap up the week tomorrow.
Talk Back to Street Life.... |
