Pulse: Nasdaq Stays Green and Tech Favorites Hold Their Own

A couple of hours ago, this was all set to be a positive piece on technology stocks after another up day. Instead it will be a story about disappointment and unfulfilled promises.

The Nasdaq ended the day up 19.97, or 0.5%, at 3913.86, but traded as high as 3984.33. TheStreet.com Internet Sector index ended up 20.59, or 2.6%, at 819.84. Blame the Dow Jones Industrial Average for the disappointing finish. The Dow ended down around 95 points, with losses reaching triple digits at one point. While there was some friendly economic data this morning, the impact was likely minimal because it did little to change any perceptions about the Federal Reserve. Rather, it was concern about rising oil costs and its impact on future earnings that wreaked havoc on the broader market.

Net/Tech Indices INDEX CHANGE % VALUE TSC Internet 20.59 +2.6% 819.84 TSC E-Commerce 1.11 +2.4% 47.22 TSC E-Finance 1.13 +2.3% 50.53 Nasdaq 19.97 +0.5% 3913.86

Since much of the day was spent in positive territory, we'll feature some of the day's better performers. Inktomi (INKT Quote) closed up $13.25, or 12%, at $122 as investors reassessed Wednesday's purchase of Fastforward Networks. Market analysts applauded the purchase of the developer of streaming-media technology, which apparently was enough for investors, who raced to snap up shares of Inktomi.

Sticking with traditional Internet plays, both eBay (EBAY Quote) and Amazon.com (AMZN Quote) pushed higher after Goldman Sachs previewed upcoming analysts' days for both companies. eBay added $5.94, or 9.5%, to $68.44, while Amazon jumped $2.44, or 5.7%, to $44.88.

Elsewhere, market favorites were back in good graces, including a number of business-to-business plays. Ariba (ARBA Quote) closed up $10.56, or 7.2%, at $157.56, while Kana Communications (KANA Quote) added $3.06, or 9%, to $35.81. Also among the day's big gainers were Redback Networks (RBAK Quote), up $9.50, or 7.4%, to $138.25 and Art Technology (ARTG Quote), which climbed $6.94, or 7.7%, to $97.25.

2:44 p.m.: Tech Stocks Keep Rolling in Afternoon Action

Technology stocks were maintaining gains into the afternoon and appeared to be heading for a second straight winning session, though weakness in the broader market may have been holding back the sector.

The Nasdaq was up 47 to 3941 in recent trading, seeing some hesitation as it headed to 4000. TheStreet.com Internet Sector index was up 25 to 825. The Dow , meanwhile, was down 97 to 11,085.

Net/Tech Indices INDEX CHANGE % VALUE TSC Internet 25.20 +3.14% 824.32 TSC E-Commerce 1.36 +2.95% 47.47 TSC E-Finance 1.13 +2.21% 50.50 Nasdaq 44.80 +1.15% 3939.80

Technical indicators were mostly positive, but suggested there was still more work to do. Dick Dickson, technical analyst with Scott & Stringfellow, noted that the Nasdaq held support yesterday at a trendline drawn between the May and August lows, and that each of those prior lows "produced decent intermediate-term rallies," so it appeared that this was the best chance for the Nasdaq to regain its footing and move higher.

However, he also noted that yesterday's tech rally "was less than inspiring" since despite the point gain, breadth was negative and there were more new lows than new highs. "That means it will be important for the rally prospects that both breadth and hi/lows improve from here."

There undoubtedly was some short-covering going on after about a week of losses, but fresh buying was also being seen in some market favorites. Included in the favorites are any number of business-to-business stocks and Internet infrastructure stocks, many of which saw profit-taking of late, but were rallying today.

Among the B2B stocks, Ariba (ARBA Quote) was up 7.4%; Art Technology(ARTG Quote) was up 7.3% and Commerce One (CMRC Quote) was up 5.7.

Among infrastructure plays, Juniper Networks (JNPR Quote) was up 3.5% and Redback Networks (RBAK Quote) was up 7%.

11:08 a.m. EDT: Amazon and eBay Jump on Up Day for Tech

The school season is in swing and analysts are starting to look toward the holidays.

Net/Tech Indices INDEX CHANGE % VALUE TSC Internet 24.06 +3.01% 823.53 TSC E-Commerce 1.20 +2.58% 47.30 TSC E-Finance 0.16 +0.25% 49.53 Nasdaq 75.9 +1.95% 3969.7

We ran across a note from Holly Becker over at Lehman Brothers, who has made headlines and caused problems for a number of Internet stocks recently with some negative calls. Now, in a report titled "Will This Christmas Be As Merry?" Becker basically says no.

Her conclusion: "Buy in front of Christmas" -- We don't buy it."

Writes Becker: "We believe that this online holiday season may not be as strong as those in the past - with fewer ads, giveaways and hype. For Amazon.com (AMZN Quote), this may be a double-edged sword; greater market share and pricing flexibility may be offset by slower consumer migration onto the Internet."

She wasn't the only one talking about Amazon today. Goldman Sachs analyst Anthony Noto put out research notes ahead of Amazon's and eBay's (EBAY Quote) analysts' meetings on Sept. 19 and Sept. 20, respectively. The report may not have garnered much attention had CNBC's Maria Bartiromo not mentioned them in her morning report, but she did.

Amazon was up 6.3%, while eBay was up 6%.

Internet stocks have been hurt by concerns over a slowdown in online advertising and the effectiveness of that advertising.

Tech stocks biggest booster today is friendly economic data. It and yesterday's strong close were enticing investors to buy technology stocks and forcing others to cover short positions this morning.

In early trading, the Nasdaq was up. TheStreet.com Internet Sector was up 24.06 to 823.53.

A tame Producer Price Index report earlier today reinforced beliefs that the Federal Reserve is through raising interest rates this year. That belief is good for stocks.

With the tech sector able to right itself yesterday and friendly economic news this morning, stocks were on the offensive. And the tech sector got a boost from an upgrade of Oracle (ORCL Quote) by Morgan Stanley Dean Witter. The boost comes ahead of Oracle's earnings report that will come after the close today. Morgan upgraded the software giant to strong buy from outperform. It was up 3.6%.