Net Sector Continues to Drop in Wake of Microsoft Fallout

But the market possibly would have found another excuse for the selloff regardless.
Publish date:

Internet stocks were dropping along with the rest of technology sector as the fallout from


(MSFT) - Get Report

problems persisted.

In recent trading, Internet Sector

index was down 55.92, or 7.1%, at 735.21. New Tech 30 was down 73.25, or 14.4%, at 436.14. The


was down 243.98, or 6.7%, at 3398.92. (To get a handle on this market volatility, read Gary B. Smith's list of

things he learned during the recent market mood swings.)


technicians were looking for a market set back again this week. And while the Microsoft news was the trigger, the market probably would have found another excuse to sell off regardless of what happened with Microsoft. The Nasdaq has fallen below the 200-day moving average around 3500, which is seen as a negative, particularly if the index closes below 3500.

Merrill Lynch

chief market analyst Richard McCabe, who contributed to the recent selloff in the technology sector with negative

comments earlier this month, today wrote that the Nasdaq appeared to have made another benchmark low near 3250 and it could be the start of a near-term bottoming pattern. However, he wrote, "at least one retest of that low seems likely to develop during the next several weeks prior to any durable recovery trend. Sentiment indicators still show only sporadic improvement, and this condition will likely have to change prior to a long-lasting market advance."

Among stocks in the news,



was up 3/16, or 4.7%, at 4 5/32 after



said it had acquired a 10% stake in the online automotive sales site. Lycos was off 5/16, or 1%, at 35 3/4.

The companies say they are forming an online destination that "will serve as the automotive hub for all the diverse sites and destinations that comprise the Lycos Network." Lycos claims more than 33 million users. Financial terms of the deal, which also includes the formation of a four-year strategic alliance, were not disclosed.

Shares of



continued to get hammered after the company reported earnings on Thursday. It was down 22 5/16, or 20%, at 85 7/16. There may have been some concern about revenue growth. Revenue of $134.1 million was better than estimates, but sequential revenue growth of 32% was below the 40% mark that the company had historically beaten, according to a note from

Salomon Smith Barney


Media Metrix Numbers Improve

Lost in the shuffle of Monday morning's selloff were March results from

Media Metrix

. According to

Goldman Sachs

, unique users rose by 3.3% to 72.7 million vs. 70.4 million in February. Frequency was up to 13.5 days per month versus 12.9 days in February, while duration rose nearly an hour to 10.7 hours per month versus 9.8 hours in February.

Goldman analysts pointed out that for the first time,




America Online


in terms of reach with 66.5% vs. 64.3% for AOL. Yahoo! was down 9 1/2, or 7.7%, at 113 5/8, while AOL was off 2 7/8, or 5%, at 57 1/8.