Reversing Tuesday's performance, the Dow fell 0.65 percent, or 71.06, to close at 10905.83 on Wednesday, while the Nasdaq rose 0.13 percent, or 4.95, to close at 3853.50. TheStreet.com (TSCM) 's Internet Index took a sharp slide of 2.18 percent, or 16.55, to close at 744.30.
The Dow's slump was driven in part by a dip in Wal-Mart's stock. The retail giant met its earnings expectations, which perhaps prompted short sellers to dump the stock and take profits. Stock spikes related to earnings typically accompany better-than-expected performance, as was seen Wednesday with Cisco.
Currently the most actively traded stock on the Nasdaq, Cisco Systemsreleased better-than-expected earnings and saw its stock climb as a result. The networking giant's stock increased $US2.31, or 3.53 percent, to close at $US67.81.
Cisco's good news bumped up the entire semiconductor sector, but Cypress Semiconductor Corp. (CY) , which analysts predict will increase its business with Cisco tenfold this year, got a major boost. The company's stock soared $3.06, or 9.42 percent, to close at $35.56. Communications equipment performances include Juniper Networks Inc. (JNPR) , which rose $6.75, or 4.25 percent, to close at $165.69; Sycamore Networks Inc. (SCMR) gained $1.44, or 1.07 percent , to close at $134.06; and Brocade Communications lost 4.77 percent to close at $203.50.
Cisco followers surely were still wondering at the opening bell why Don Listwin, the company's second in command and long believed to be in line to succeed CEO John Chambers, announced his plans to leave the networking giant Tuesday, especially given Cisco's brilliant earnings report. All became clear Wednesday, when Listwin revealed his new position as CEO of the newly merged Software.com (SWCM) and Phone.com (PHCM) . The news of both the merger and its stellar leadership was well-received by investors. The stocks of Software.com and Phone.com flew up 32.19 percent and 16.73 percent, respectively, to close at $142.44 and $91.13. The all-stock deal is worth upward of $7 billion based on Wednesday's stock values.
By contrast, many other Internet companies saw their stock values evaporate.
Amazon.com (AMZN) dove $2.06, or 6.26 percent, to close at $30.88, after Sanford C. Bernstein analyst Faye Landes rated the company with an "underperform." Ouch.
Other sliding Internet stocks were ExciteAtHome, which fell 6.51 percent to $14.13; CMGI (CMGI) lost 9.13 percent to end at $36.69; RealNetworks (RNWK) was down 4.63 percent to $40.56.
The business-to-business sector also lost momentum. Ariba (ARBA) closed down 5.04 percent to $135.31, Internet Capital Group (ICGE) fell 2.65 percent to $34.44, Scient (SCNT) chiseled off 10.53 percent to close at $43, and Commerce One (CMRC) lost $3.81, or 7.44 percent, to close at $47.44. Also hit was Check Free, down 7.88 percent to $50.44.