Apparently, unless the economy is heading for a recession, the stock market isn't going to get too carried away.
Despite a tame
Consumer Price Index report this morning, stocks were only marginally higher. After seeing a number of soft economic reports over the past couple of weeks, today's readings did not come as much of a surprise and did little to change popular opinion that the
Federal Reserve will not change interest rates when it meets later this month. The
was up 27.94, or 0.7%, to 3879 in recent trading.
TheStreet.com Internet Sector
index was up 4.86, or 0.5%, to 918.49.
Among stocks in the news,
was down 2 3/8, or 3.6%, to 65 5/8 after the company said it would acquire
, a fixed price person-to-person trading marketplace. eBay will issue between 4.6 million and 5.5 million shares for all outstanding shares of Half.com, which sells previously owned books, music, movies and games for at least half-off list price. Half.com differs from eBay in that there is no auction, just one buyer dealing with one seller.
Following the acquisition,
upgraded eBay to strong buy from buy. Analyst Lauren Cooks Levitan wrote that investors may focus more on Half.com's cash burn and the acquisition's "mildly dilutive impact" on eBay's earnings this year, but said Half.com's business "could grow at a pace equal to or greater than that of eBay."
"When asked 'What's the next eBay' for the past several months our answer has been Half.com," Cooks Levitan wrote. "In our view, similar to eBay, Half.com has quickly gained traction with users through the viral nature of its service. Additionally, we believe Half.com's marketplace platform business model shares the same elegance as eBay's highly scalable fee-based business model." Robertson Stephens has done underwriting for eBay.
eBay's newest acquisition actually segues into the next stock of note,
, which was up 2 5/16, or 4.2%, to 58 15/16 after
reporting quarterly numbers last night. CMGI reported a loss of $1.53 a share, 30 cents better than the
First Call/Thomson Financial
estimate. Revenue of $226 million was more than 400% better than the $43.6 million in revenue from a year before.
Following the report,
reiterated a strong buy rating on CMGI, writing that its current market value "reflects a (31%) discount to our calculated fair market value -- suggesting CMGI shares reflect a compelling investment opportunity." Prudential has not done underwriting for CMGI.
Analyst Paul Merenbloom wrote, "following a turbulent three-month period, CMGI's third fiscal quarter results clearly illustrate the company's ability to integrate acquisitions, adapt to (ever) changing market conditions, and to remain focused on the business of developing, operating and leveraging Internet-based commerce and enabling companies."
So what does CMGI have to do with eBay? @Ventures, which is run by CMGI, owns 25% of Half.com, according to Prudential, therefore giving CMGI approximately 1 million to 1.25 million shares of eBay.
Schwab Reports Volumes
said Tuesday that trading volumes dropped by more than one-third in May from April and that customer assets continued to decline -- a trend in line with the overall market. Daily average revenue trades dropped 37% to 198,400 from 317,300 in April but were up from 150,000 one year ago. Assets held in customer accounts, including those of recently acquired
, for the second month in a row, fell back to $856.3 billion at month-end from $896.3 billion in April, a decline of 3%. Schwab and other online brokerages have seen their stocks suffer in recent months because of lower trading volumes.