Greenspan Effect: His Words Electrify Net Sector

Net sector surged today following Greenspan's testimony before the Senate Banking Committee.
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The last time Federal Reserve Chairman Alan Greenspan spoke, the Nasdaq rallied. The next day, the market freaked out, with some having second thoughts pushing the blame on what the Fed chairman actually said. Well, the first part of that equation happened today and we'll have to wait and see about the second part tommorrow.

TheStreet.com Internet Sector

index closed up an amazing 82.58, or 7.6%, at 1167.48.

TheStreet.com New Tech 30 index, finished up 42.98, or 5.9%, at 766.50. The Fed chairman did not send another warning shot to the market today. However, the Net sector actually was higher even before Greenspan took center stage before the

Senate Banking Committee

. Tech rebounded today, with even some old out-of-favor Internet bellwethers getting in the act. Short-covering likely contributed to the gains.

America Online

(AOL)

was a big winner, closing up 7 3/8, or 15%, at 57. Gains came after

Merrill Lynch

spoke

highly of the company's merger with

Time Warner

(TWX)

. Analyst Henry Blodget wrote that the merger created "a strong, powerful combination," and that a 49 1/4 price that AOL was trading at yesterday, "seems undervalued by almost any measure." Blodget slapped a 12- to 18-month price target on AOL of $90 and wrote that given the lack of spread between the two stocks, he was "indifferent as to which stock investors buy." Time Warner finished up 3, or 4.1%, at 76 9/16.

Merrill also helped lift shares of

eBay

(EBAY) - Get Report

, as it began coverage of the online auction site with a buy rating and a 12- to 18-month price target of $175. Blodget said he viewed the stock as a core holding in a "balanced" Internet portfolio. It finished up 20 7/16, or 15%, at 154 15/16.

Other Net bellwethers surged as well.

Amazon.com

(AMZN) - Get Report

closed up 6 7/8, or 10.8%, at 70 7/16 after the online retailer teamed up with both

Oracle

(ORCL) - Get Report

and

Nextel Communications

(NXTL)

in wireless ventures.

Yahoo!

(YHOO)

also got into the act, closing up 12 13/32, or 8%, at 166 7/32, while e-commerce sites that have been beaten up of late also took part in the rally.

TheStreet.com E-Commerce

index finished up 4.83, or 5.1%, at 99.34.

Other notable gainers included

Network Solutions

(NSOL)

, which closed up 36 5/8, or 14%, at 299 13/16 after a positive note from

Prudential Securities

. Also,

CMGI

(CMGI)

finished up 15 7/16, or 15%, at 120 3/16 after a couple of positive

notes.