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Early NAPM Report Pressures Internet Sector

Stronger-than-expected data push bond yields higher, in turn putting heat on Net shares.

The inadvertent release of the

National Association of Purchasing Management

report for August has helped to keep pressure on the Internet sector.

The NAPM numbers came in stronger than anticipated, pushing bond yields higher, though they have since stabilized, lessening the pressure. Internet stocks have been extremely vulnerable to fluctuations in interest rates due to high valuations. The yield on the long bond has crept to the 6.10% level. Just last Thursday, it was trading at 5.85%. Strong data have increased concerns that the

Federal Reserve

is not done raising interest rates.


examined the relationship between interest rates and Internet stocks in

June. Internet Sector

index was recently trading down 5.60, or 1%, at 545.81. Before the NAPM was released around noon EDT, the DOT was trading about 4 points lower. The DOT had originally held support around the 543 area, to which technicians were

pointing. It may now slide to the 525 level, which would be a 50% correction from August's 150-point gain, which took the DOT to just above 600 from about 450.

Net bellwethers, which have some of the highest valuations in the sector, took a direct hit after the slide in bond prices.



, which traded as high as 143 1/2 before the NAPM came out, was recently down 4 1/8, or 3%, at 139 11/16;


was down 6, or 5%, at 113 1/4 after trading as high as 118 1/2.

America Online


, which struggled to get over the 100 level last week, was recently below the 90 level, down 3 3/8, or 4%, at 89 7/8.