SAN FRANCISCO (02/03/2000) - The Internet sector was focused on the Federal Reserve during Wednesday's session and Amazon.com after the close.
The Fed was in the spotlight as it deliberated on interest rates, but did the expected when it raised rates by 25 basis points. Net stocks were able to push higher after the announcement, though the Fed suggested it remained on a tightening cycle, which may have dulled some indices' enthusiasm.
TheStreet.com Internet Sector index ended the day up 36.18 points, or 3.4 percent, at 1109.40. It traded as high as 1127.68 after the Fed announcement before settling back late in the day. The Nasdaq rose 21.98, or 0.54 percent, to 4073.96. The Dow fell 37.85, or 0.34 percent, to 11003.20.
After the close, Amazon announced that its fourth-quarter pro forma loss was 55 cents, greater than the 48-cent loss estimate. However, sales of $676 million for the quarter were more than double its year-earlier figures, and above the $650 million in revenues the company said it had early in January. Investors also were cheered by comments from the company that the quarter's losses should represent the high point for operating losses. Amazon was trading higher in after-hours trading after closing up 2 points at 69.44 in the regular session.
Amazon was not the only retailer to enjoy a successful day. Shares of beleaguered eToys closed up 2.5, or 17 percent, at 17 after Robertson Stephenson upgraded the online toy store to "buy" from "long-term attractive."
Analysts wrote that the stock's current valuation, coupled with its "attractive growth opportunities in new categories and international markets, represents a compelling risk/reward for what we continue to believe is a franchise e-tailer." (Note that Robertson Stephens has done underwriting for eToys.) Two other traditional Net plays also had successful days. Yahoo finished up 10.63, or 3.4 percent, at 328. Gains came after the company said it was teaming with German mobile phone maker Siemens to make Internet content available on Siemens' phones. Also, WR Hambrecht initiated coverage of Yahoo with a "market outperform" rating, its top rating, and a $400 price target.
America Online, which has been battered since announcing its merger with Time Warner last month, closed up 4.69, or 8.5 percent, at 51.94. The company said Wednesday that its membership surpassed the 21 million mark and that for the first time, members were averaging more than an hour a day online. However, there were also reports Wednesday that AOL was being sued by a Washington law firm alleging that AOL's new 5.0 Web browser disables access to other Internet services. AOL denied the charges.
Several other stocks also saw movement after reporting earnings Tuesday. Copper Mountain Networks closed up 9.19, or 16 percent, at 66 after besting earnings expectations. And GlobeSpan finished up a solid 45.75, or 37 percent, at 168.13 after the maker of chips for fast Internet access turned in a four-cent profit versus a break-even estimate and also announced a 3-for-1 stock split.
VerticalNet closed down 19.13, or 7.6 percent, at 233 despite besting earnings estimates and announcing a 2-for-1 split. The stock had run up in advance of its report, and traders were likely taking post-earnings profits.