Market Update: Internet Stocks Close Sharply Lower; Major Indices Little Changed - TheStreet

The attempted comeback was short and unsuccessful as selling pressure picked up in afternoon trading and all the major indices ended in the red.

Some of the hardest-hit stocks today were those in the Internet corner;

TheStreet.com Internet Sector

index flopped 6.1% to 694.5.

priceline.com

(PCLN)

infused a fresh round of jitters into the net sector with its warning that third-quarter revenues would fall short of estimates. The company, which functions as an online clearinghouse for everything from airline tickets to groceries to cars, was down 42.3% to $10.75.

TheStreet.com's

Katherine Hobson wrote about the latest

fire sale at priceline.com.

Fellow net stocks felt priceline's pain with

Yahoo!

(YHOO)

hitting levels not seen since late last year. The stock has been cut by more than half and is now down some 60% for the year. It ended down 11.8% to $90.38.

Former high-flying Internet incubator

CMGI

(CMGI)

was flirting with a 52-week low, ending down 12.5% to $26.63, while

Broadvision

(BVSN) - Get Report

was also in the dumps, lately down 6.2% to $27.56.

Blue-chips were having a better time of it as the strength in some retail, oil and industrial components attempted to compensate for Old Economy's

Eastman Kodak

(EK)

, which yesterday joined the ranks of corporations singing the third-quarter earnings blues. Kodak ended down 4.4%.

Despite the move to the downside, Jim Benning, a trader at

BT Brokerage

, said he thinks the market is nearing a bottom and that the bulk of the bad news is out of the way for the earnings warnings.

Sector Watch

Semiconductors made an attempt at a comeback in earlier trading but had lately fallen back. The sector has been under water of late on concern that chip demand is slowing. The

Philadelphia Stock Exchange Semiconductor Index

was off 0.7%.

Brokerage stocks slipped slightly, and banks and insurance stocks were down this morning following chatter that

FleetBoston's

(FBF)

talks to buy

Summit Bancorp

. The

American Stock Exchange Broker/Dealer Index

was down 1.8%. However, by the end of the day the

Philadelphia Stock Exchange/KBW Bank Index

ended about unchanged and the

S&P Insurance Index

inched up 0.9%.

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Bonds/Economy

Bonds are under pressure in part because a

report in today's

Washington Post

says an error in calculating the

Consumer Price Index

(

definition |

chart |

source

) resulted in it being understated.

The Bureau of Labor Statistics

confirmed that it will revise CPI data for January to August, and that the increase over that period will be revised to 2.7% from 2.6%. The bureau will release corrected data on Thursday at 10 a.m. EDT.

The

Washington Post

article says the correction is likely to add 0.1 to 0.3 percentage points to the overall and core inflation rates. Overall CPI inflation was running at a rate of 3.4% in August, while core CPI inflation, which excludes food and energy, was running at 2.5%, nearly a two-year high.

A higher inflation rate devalues bonds because it erodes the value of the fixed interest payments they make.

The benchmark 10-year Treasury note lately was up 1/32 at 99 14/32, lifting its yield to 5.825%.

The BLS said the error was in the portion of the report that measures housing costs, and that software was responsible.

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