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Net Stocks Slip on Profit-Taking After DOT Breaches 1000

It looks like a strong holiday season for e-tailers, though Merrill's Blodget says preliminary reports indicate it's not extraordinary.

The Dow Jones Industrial Average was not able to sustain gains in the days after trading above 10,000 for the first time. And the Nasdaq Composite Index did not close above 3000 after its first foray into that territory. Like these two heavyweights, TheStreet.com Internet Sector index was unable to hold above 1000 after breaching that level today for the first time.

The DOT closed down 16.21, or 1.6%, at 969.40 after reaching a high of 1008.98 around midsession. While the index is certainly not the tell-all for the Internet sector, it appeared as if traders began to take some profits after the DOT broke the 1000 level.

And who could blame them? The index has gained roughly 200 points since Nov. 12, when it was trading at 808.77. Technicians have claimed the sector has been

overbought for some time, though investors continued to pour money into Net stocks. In addition, Net stocks got a lot of mileage from the preholiday shopping season hype, particularly if you consider that analysts have been looking ahead to the holidays since

August. The market finally began to pay attention to interest rates, which

rose again today.

And while most reports indicated a solid start to the season for e-tailers,

Merrill Lynch's

Henry Blodget reported that online sales were "very strong" but "not extraordinary." He also claimed that reported numbers from

Amazon

(AMZN) - Get Report

for the first 12 hours of the holiday season projected strong revenue for the holidays, "but not amazing."

Amazon ended the day down 2 11/16, or 2.9%, at 90 7/16. But other e-tailers performed well.

eToys

(ETYS)

finished up 7/16, or 0.7%, at 67 1/16, though it traded as high as 70 33/64.

Bluefly

(BFLY)

ended up 2 1/8, or 16%, at 15 7/16 and

ShopNow.com

(SPNW)

closed up 1 11/16, or 8%, at 23 1/16. Also of note,

Ashford.com

(ASFD)

, an Internet-based luxury-goods retailer that soared 76% on Friday after a

Goldman Sachs

analyst plugged the stock, closed down 4 1/2, or 18%, at 20 3/87 today.

Other notable gainers included

CMGI

(CMGI)

, which finished up 8 7/8, or 6%, at 155 1/2, though it traded as high as 170 3/4. The company got some positive press in

The New York Times

TST Recommends

on Sunday. In addition, CMGI's

Alta Vista

portal bought

Raging Bull

, an online investing and financial site.

And those connected with the new

NBC Internet

tracking stock also benefited. The stock, which will go under the NBCI ticker, begins trading on Tuesday.

Xoom.com

(XMCM)

closed up 17, or 24%, at 88 1/2, while

CNet

(CNET) - Get Report

, whose

Snap.com

portal also will be incorporated into NBCI, closed up 1, or 1.8%, at 55 1/2.

Exodus Communications

(EXDS)

closed down 8 5/16, or 6.6%, at 117 15/16. The company said it intends to raise $500 million through private offerings of senior notes and convertible subordinated notes.

Online brokerages were mostly weaker due to rising interest rates, despite a note from

Credit Suisse First Boston

that, while bullish in scope, came with a warning. Analysts noted that trading volumes of online brokerages surged to record levels in November. Average trades of 296 million were up 44% for the month vs. October.

Analyst James Marks wrote that short-term trading trends "should prove beneficial for the online brokerage stocks, irrespective of current valuations or performance trends." But at the same time, Marks indicated that trading in online brokerage stocks based on short-term trading volume was "a fool's game that ultimately leads to losses." He wrote that he prefers to focus on "the underlying economics of accounts and relationships, the acquisition costs of those relationships, and the returns being generated."

E*Trade

(EGRP)

finished down 1 1/16, or 3.3%, at 30 7/8, while

Ameritrade

(AMTD) - Get Report

ended down 1 1/16, or 4.3%, at 23 7/16, and

Schwab

(SCH)

closed off 1 5/8, or 4%, at 38 3/8.