Internet stocks helped boost the
Nasdaq Composite Index
on Thursday as investors brought a confident attitude toward the sector following the end of the tax-loss-selling season.
Internet index, the
, rose more than 6% Thursday, paced by heavy trading in Internet holding companies
Internet Capital Group
CMGI closed up more than 9% on volume three times its daily average, while ICGE ended up more than 19%. Perhaps more important than the numbers is who was rising. To be sure, the marquee names of the Internet --
-- also were up Thursday. AOL closed up nearly 4%; Yahoo! was up nearly 5% and Amazon trading up more than 6%.
But the rise of CMGI and ICGE is significant, especially given that their names don't have quite the visibility of other winners Thursday. Both companies are leaders in their space, but the nature of their operations is a little less clear to some investors. So the rise of their shares signals that investors feel confident stepping beyond the best-known names and a little more deeply into the sector.
"People look at these stocks as proxies for the Internet," said Luke Fichthorn, analyst with
Also playing into the rise of the Internet stocks: the end of tax-loss season, that time when mutual fund managers sell their big losers to reduce investors' capital-gains tax bill due on last year's returns.
Internet-sector stocks were among the hardest-hit over the past year. For funds trying to avoid giving their investors a tax bill (especially when they were down for the year), selling off the badly hurt Internet stocks makes perfect sense. And for those wanting to buy, it made perfect sense to wait to buy until they were finished.
Tax-selling season ended Tuesday, and sure enough, CMGI's stock began rising sharply. ICGE also reports earnings Wednesday, and investors may be buying in early, following the advice of a positive research update sent by analysts from
Credit Suisse First Boston
Five of the six ICGE companies visited had raised additional investment funding and four of the six were on track for filing for IPOs within the next year or so, the analysts stated.
1:43 p.m.: Chips Feeling Chipper
Semiconductor stocks were rising Thursday following good news from chip giant
and an industry association report that offset yesterday's fears about telecom spending slowdown and a possible oversupply of some specialty chips.
On Wednesday, the
Philadelphia Stock Exchange Semiconductor Index
was trading up more than 4%, led by a rise in Intel, which also was up more than 4%. Other parts of the sector were also up, but not as much, reflecting apparent concerns about potential inventory problems and a spending slowdown.
"My sense is that the industry is getting mixed data points," said Quinn Bolton, analyst for
CIBC World Markets
The good news is dominating today, and bringing investors with it, despite continuing pockets of skepticism. On Wednesday, Intel reported that it is on track to meet a projected sequential growth rate of 4% to 8% for the quarter. In addition, Intel said PC sales were brisk. An optimistic
report Wednesday from the
Semiconductor Industry Association
that predicted strong growth for the next few years also increased confidence.
All four semiconductor stocks that dropped after analysts' downgrades yesterday were trading back up today.
were all higher today.
Still out there: The well-supported concern that telecom infrastructure spending will slow next year.
and competitor Xilinx
down yesterday after they were downgraded on fears that their chips, programmable logic devices used for switching network traffic, were in oversupply with manufacturers.
Altera, which dropped 20% Wednesday, was up a little more than 3% today. Xilinx, which said today it was on track to meet 12% revenue projections for the quarter, was up less than 2% today after dropping 5% yesterday. Altera warned that it was expecting revenues for the quarter to be at the lower end of a 12%-15% range. The early timing of the announcement caused some speculation that there may be more to come.
And while Intel may be expecting brisk sales for PCs this quarter, it may not translate to increased chip sales, especially if computer makers are working off inventories ordered in the first half of the year, which happened with chips for cell handsets.