Stocks Close Sharply Lower as Internet Sector Leads Broad Selloff

Continued worries over interest rates weighed on the market.
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A widespread, sharp selloff marked the week's first day of trading, as Internet stocks were notable downside losers.

TheStreet.com Internet Sector

swooned 46.70, or 7.5%, to 576.68.

Internet stocks were pressured by chatter of

cautionary comments on the sector from Ralph Acampora, the influential chief technical analyst at

Prudential Securities

. Not helping Net stocks or other stocks with lofty valuations for that matter were continued worries over interest rates.

The tech-heavy

Nasdaq Composite Index

tumbled 66.50, or 2.6%, to 2453.64.

The

Dow Jones Industrial Average

gave up 174.61, or 1.6%, to 10,654.67. The

S&P 500

dropped 23.64, or 1.8%, to 1306.65. The

Russell 2000

fell 8.75, or 2%, to 440.39.

"I just think it's a cautionary market and therefore vulnerable," said Charles Payne, president and chief analyst at

Wall Street Strategies

. "You've got to wait this out. I still don't get that real sense of panic, but the thing that does bother me is there's no leadership."

The 30-year Treasury bond was unchanged to 92 26/32, yielding 5.757%.

On the

New York Stock Exchange

, decliners beat advancers 2,035 to 948 on 740 million shares. On the

Nasdaq Stock Market

, losers beat winners 2,639 to 1,367 on 915 million shares.

On the NYSE, 55 issues set new 52-week highs while 43 touched new lows. On the Nasdaq, 88 issues set new highs while new lows totaled 53.

On the Big Board,

America Online

(AOL)

was most active, with 26.3 million shares changing hands. It was down 6 15/16, or 5.5%, to 119 1/2.

On the Nasdaq,

Dell

(DELL) - Get Report

was most active, with 40.1 million shares changing hands. It was down 1 1/4 to 36 1/8.

Market data above are preliminary. Updated numbers and analysis will follow in the Market Roundup

--

Aaron Task contributed to this report.

2:57 p.m.: Stocks Sharply Lower as Tech Sector Continues to Depress Market

Major market averages were trading in the neighborhood of their session lows heading into the final hour of trading, as the market kicks off the week with a swift kick to the stomach.

Suffering big-time were Internet stocks.

TheStreet.com Internet Sector

index was down 38 to 585.

CMGI

(CMGI)

continued to hold the dubious honor of biggest point loser in the index. It was down 17 5/8, or 8%, to 214 1/4.

Internet issues sold off in part on chatter of

cautionary comments on the sector from Ralph Acampora, the influential chief technical analyst at

Prudential Securities

.

Elsewhere, the

Dow Jones Industrial Average

was down 114 to 10,715. The

S&P 500

was down 18 to 1312. The

Nasdaq Composite Index

was down 56 to 2464. The small-cap

Russell 2000

was down 7 to 442.

While the moves in major market averages have been sizable, the volume hasn't been.

"It's a light day volume wise," said Jay Suskind, head of institutional equity trading at

Ryan Beck

. "It's really a ho-hum day."

Market participants also said there are continued worries over the direction of interest rates, which has also put a damper on the market today.

Suskind said buyers today have been "hibernating."

"A lot of the momentum and a lot of the volatility and volume has just seemed to dry up," said Suskind. "The day traders have calmed down and haven't been around as much."

The 30-year Treasury bond was down 5/32 to 92 21/32, yielding 5.77%.

On the

New York Stock Exchange

, decliners were leading advancers 1,872 to 1,039 on 562 million shares. On the

Nasdaq Stock Market

, losers were leading winners 2,493 to 1,382 on 703 million shares.

On the NYSE, 53 issues had set new 52-week highs while 35 had touched new lows. On the Nasdaq, 82 issues had set new highs while new lows totaled 47.

On the Big Board,

America Online

(AOL)

was most active, with 21 million shares changing hands. It was down 6 15/16 to 119 1/2.

On the Nasdaq,

Dell

(DELL) - Get Report

was most active, with 34 million shares changing hands. It was down 1 1/16 to 36 1/4.

Sector Focus: Utilities

One of the few bright spots in the market today have been utility stocks. The

Dow Jones Utility Average

was in record territory, up a decent 1%. Among the biggest gainers in the average were

Peco Energy

(PE) - Get Report

and

Duke Energy

(DUK) - Get Report

.

Peco Energy was up 1 3/8 to 49 15/16, while Duke advanced 1 1/4 to 59 3/8.

2:02 p.m.: Internet Sector Continues to Get Hammered

Winners were scant this afternoon as the major market barometers tumbled, with Internet stocks suffering hefty losses.

TheStreet.com Internet Sector

index was down 35, or 6%, to 588. The index is now roughly 25% off its closing all-time of 790.44, which it reached on April 12.

Net stocks sold off on talk of

cautionary comments on the sector from Ralph Acampora, the influential chief technical analyst at

Prudential Securities

.

The

Dow Jones Industrial Average

was down 120 to 10,710. Reflecting the widespread selloff in the tech sector, the two biggest losers in the blue-chip average were

IBM

(IBM) - Get Report

and

Hewlett-Packard

(HWP)

.

The

S&P 500

was down 18 to 1313. The

Russell 2000

was down 6 to 443.

The 30-year Treasury bond was flat at 92 26/32, yielding 5.76%.

On the

New York Stock Exchange

decliners were beating advancers 1,794 to 1,062 on 479 million shares. On the

Nasdaq Stock Market

losers were beating winners 2,401 to 1,387 on 599 million shares.

Bank stocks were sharply lower after

Credit Suisse First Boston

analyst Michael Mayo downgraded banking titans

Bank One

(ONE) - Get Report

,

Chase

(CMB)

,

Citigroup

(C) - Get Report

and

J.P. Morgan

(JPM) - Get Report

to sell -- yes, sell -- from hold.

On the NYSE, 53 issues had set new 52-week highs while 32 had touched new lows. On the Nasdaq, 80 issues had set new highs while new lows totaled 41.

On the Big Board,

America Online

(AOL)

was most active, with 17 million shares changing hands. It was down 5 5/8 to 120 13/16.

On the Nasdaq,

Dell

(DELL) - Get Report

was most active, with 31 million shares changing hands. It was down 1 to 36 3/8.

1:00 p.m.: Midday Musings: High-Tech and Growth Issues Can't Generate Excitement

12:01 p.m.: Stocks Turn Lower as Tech Sector Takes a Beating

Internet stocks were down sharply, continuing their recent decay, as the tech-heavy

Nasdaq Composite Index

tumbled 2%.

TheStreet.com Internet Sector

index was down 41, or 7%, to 582.

CMGI

(CMGI)

was the biggest loser in the index. It was down 18 3/4 to 212 3/8.

The Nasdaq Comp was down 62 to 2458.

The

Dow Jones Industrial Average

was down 96 to 10,733. The

S&P 500

was down 16 to 1315. The small-cap

Russell 2000

was down 6 to 444.

Blame for the selloff in the tech sector came in part on fears over higher interest rates.

The 30-year Treasury bond was up 10/32 to 92 31/32, yielding 5.75%.

On the downside, bank stocks were taking a hit after

Credit Suisse First Boston

downgraded banking titans

Bank One

(ONE) - Get Report

,

Chase

(CMB)

,

Citigroup

(C) - Get Report

and

J.P. Morgan

(JPM) - Get Report

to sell from hold.

The

Philadelphia Stock Exchange/KBW Bank Index

was down 3%.

Brokerage stocks were also getting pounded. The

American Stock Exchange Broker/Dealer Index

was down 3%.

Utility stocks were higher. The

Dow Jones Utility Average

was up 1%.

On the

New York Stock Exchange

, decliners were beating advancers 1,591 to 1,112 on 312 million shares. On the

Nasdaq Stock Market

, losers were beating winners 2,085 to 1,403 on 395 million shares.

On the NYSE, 48 issues had set new 52-week highs while 20 had touched new lows. On the Nasdaq, 72 issues had set new highs while new lows totaled 34.

On the Big Board,

America Online

(AOL)

was most active, with 13 million shares changing hands. It was down 5 11/16 to 120 3/16.

On the Nasdaq,

Dell

(DELL) - Get Report

was most active, with 22 million shares changing hands. It was down 1 11/17 to 35 5/8.

Tech Focus

Among tech sector gauges, the

Nasdaq 100

, the

Morgan Stanley High-Tech 35

and the

Philadelphia Stock Exchange Computer Box Maker Index

were all down 2%.

The

Philadelphia Stock Exchange Semiconductor Index

was also down 2%.

In tech news,

RadiSys

(RSYS) - Get Report

is acquiring

Texas Micro

(TEXM)

for $115 million. On the news, RadiSys was down 2 1/2, or 7%, to 32 1/4, while Texas Micro jumped 1 5/8, or 35%, to 6 1/4.

Elsewhere in tech news,

3Com's

(COMS)

Palm Computing

unit said it began selling the

Palm VII

hand-held computer for $599.

3Com was down 1 3/16 to 28 3/16.

On the research front,

SoundView Technology Group

upgraded

Ingram Micro

(IM)

to buy from hold and placed a price target on the stock of $42. It was down 3/8 to 30 5/8.

11:02 a.m.: Tech Sector Takes a Tumble

Technology stocks were suffering a beating, as the tech-loaded

Nasdaq Composite Index

fell the most among the major market barometers so far this morning.

Meanwhile, Internet stocks were getting hammered.

TheStreet.com Internet Sector

index was down 22 to 601.

CMGI

(CMGI)

was the biggest drag on the index, down 9 5/8 to 222.

The Nasdaq Comp was down 29 to 2491.

Elsewhere, the

Dow Jones Industrial Average

was up 3 to 10,833. The

S&P 500

was down 3 to 1328. The

Russell 2000

was down 1 to 448.

The 30-year Treasury bond was down 4/32 to 92 17/32, yielding 5.78%.

Meanwhile, in the news this morning, the

New York Stock Exchange

has confirmed that late trading could come as early as July.

Bank stocks were taking a beating after

Credit Suisse First Boston

downgraded banking titans

Bank One

(ONE) - Get Report

,

Chase

(CMB)

,

Citigroup

(C) - Get Report

and

J.P. Morgan

(JPM) - Get Report

to sell from hold.

The

Philadelphia Stock Exchange/KBW Bank Index

was off 2%. For their part, Bank One was down 2 13/16 to 57; Chase was down 2 3/16 to 76 3/4; Citigroup was off 2 3/16 to 65 5/8; while J.P. Morgan was down 2 1/8 to 136 9/16.

In a research note today, Stephen Shobin, chief technical analyst at

Lehman Brothers

, pointed out that small-cap and out-of-favor issues "have been the bullish stories" over the past seven weeks, a trend, he wrote, is "likely to continue, because the corrections in big-cap leaders such as Internet, semiconductor and telecom appear far from complete."

Overall, the market's "major trend," which he pegs as usually four months or longer, is bullish, according to Shobin. He noted that bonds are improving and that is a positive for the market. Also, he pointed out that the percentage of stocks trading above their 30-week averages is "still well south of the level which has marked prior, major tops."

The "day-trading trend," which he quantifies as usually up to a week, isn't as rosy and he sees it as "neutral/bearish." He wrote that "momentum is oversold enough for a little rally, but the quick fade after Wednesday's bounce suggests a poor and risky trading environment."

On the Big Board, advancers were beating decliners 1,346 to 1,140 on 195 million shares. On the

Nasdaq Stock Market

, losers were beating winners 1,704 to 1,540 on 265 million shares.

On the NYSE, 42 issues had set new 52-week highs while 16 had touched new lows. On the Nasdaq, 68 issues had set new highs while new lows totaled 24.

On the NYSE,

America Online

(AOL)

was most active, with 9 million shares changing hands. It was down 4 7/16 to 122.

On the Nasdaq,

Dell

(DELL) - Get Report

was most active, with 14 million shares changing hands. It was down 1 3/17, or 3%, to 36 1/8.

9:55 a.m.: Stocks Open Little Changed

Stocks were little changed early on while the 30-year Treasury bond slipped.

The

Dow Jones Industrial Average

was up 5 to 10,834.

Elsewhere, the

S&P 500

was up 2 to 1333. The

Nasdaq Composite Index

was down 4 to 2516. The

Russell 2000

was up 1 to 450.

TheStreet.com Internet Sector

index was down 6 to 617.

The long bond was down 8/32 to 92 12/32, yielding 5.79%.

Most Up at Open -- NYSE

Dow Chemical (DOW) - Get Report, up 2 1/4 to 128 7/16

.

Most Up at Open -- Nasdaq

CustomTracks (CUST) , up 6 15/16 to 67 7/8

.

Most Down at Open -- NYSE

Telecom Italia (TI) , down 8 1/8 to 100 7/8

:

Olivetti

has emerged victorious in its long battle for control of Telecom Italia.

Most Down at Open -- Nasdaq

CMGI (CMGI) , down 2 1/4 to 229 1/2

.