This is so unlike the
. A big recovery day Thursday and only a double-digit gain Friday rather than the triple digits that have been more typical? A bad sign? Not likely.
In recent trading, the Nasdaq was up 92.96, or 2.5%, at 3866.99.
TheStreet.com Internet Sector
index was up 41.33, or 4.8%, at 898.30. Traders that bought at or near the lows Thursday were likely taking some profits after Friday's early run-up, while those that feel all is well in tech were back in buying, and any setbacks were expected to be supported.
Jim Herrick, managing director of trading with
Robert W. Baird
saw positives in the price action. "Just having it strong again is not healthy," he said. "You don't want to go straight up three or four days in a row. I'd rather see it go step-like in an orderly fashion."
Yet, Herrick said he expects a choppy market going forward, though with a higher trend. Earnings season was positive, he said, which will continue to provide underlying support, though with the earnings season over to a large extent it does take away a market catalyst. And focus will be shifting to the
which meets next month and is widely expected to raise interest rates. But Herrick said that a rate increase was widely discounted by the market and even if the Fed were to raise rates by 50 basis points, he said investors would see the Fed as trying to nip inflation in the bud rather than suggesting that the economic situation was more serious than they believed.
The recent weakness in the market also should be a positive, Herrick said, since there are more compelling reasons to buy rather than when the market was out of control on the upside. For Internet stocks, Herrick said, focus will continue to be on those that are profitable, with less patience for those that are far from turning a profit.
Bears holding out hope for things to turn around were left with technical indicators that
suggested another downturn if the Nasdaq does not close above last week's high close of 3793. While the Nasdaq has held safely above that level much of the day on Friday, the last hour of trading has been the telling one for the market of late.
Among stocks in the news,
was among the leading decliners, off 4 5/8, or 40%, at 7, on news that a federal court had ruled against it over copyright infringement. According to
, the court ruled that MP3.com violated copyright laws by creating a database for users to store music and then access it via any computer that was connected to the Internet. Record labels had filed suit against MP3, contending they had copyrights to the albums in the database.
was up 15/16, or 13%, at 8 1/16 after posting quarterly numbers that bested expectations, although not everyone was impressed. eToys reported a loss of 30 cents for its fiscal fourth quarter vs. the 32-cent loss Street estimate.
But in a note on the report,
analysts focused on an announcement from the company that it was "exploring opportunities to separately finance its European operations." Morgan analyst Tom Wyman wrote that "our interpretation of this news is that eToys is nervous about raising additional growth capital later this year for the parent company. Spinning off European operations (where building a brand from scratch will be very costly) could create a healthier financial picture for the parent company which needs to be refinanced in the next few quarters."
Wyman goes on to question whether European markets will want to finance a European eToys operation that is six months old, particularly when the parent company is trading at a fraction of its highs from last year, and indicated he was not sure if the spinoff would be done. Without the spinoff, he writes, eToys Europe would stay within eToys which "by definition causes the company to lengthen its 'path to profitability' which without Europe, the company said, would be 2002." And he concludes "with Europe included, eToys is unlikely to make money until 2003 or 2004." Wyman, who also noted that the company's March results "were strong on many fronts," increased loss estimates for its first fiscal quarter to 41 cents from 35 cents.