Following the Leaders, Net Sector Stages a Recovery

Traditional bellwethers trade up this afternoon, and drugstore.com gets a warm reception in the market.
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SAN FRANCISCO -- Fed Chairman Alan Greenspan failed to spook financial markets any further with the second leg of his Humphrey-Hawkins testimony, giving room for Internet stocks to rally. Greenspan's first leg of testimony last week provoked fears of another rate hike and a sharp selloff in the stock market. But he didn't add much to those comments this time around, allowing for a modest recovery.

TheStreet.com Internet Sector

index was recently up 7.37, or 1.3%, at 578.18 after trading as low as 558.62 during his testimony. Some of the Net bellwethers that have lately been among the weaker stocks were leading the charge, with short-covering likely contributing to the recoveries.

Yahoo!

(YHOO)

was among the leading point-gainers, up 7 1/16, or 5%, at 138 3/8. The company said it had entered into an agreement with

Telebanc Financial

(TBFC)

that gives users of Yahoo! Finance and My Yahoo! online access to their Telebanc account information. Telebanc also was benefiting, up 1 7/8, or 6%, at 31 11/16 in recent trading.

Also,

eBay

(EBAY) - Get Report

, which was under pressure both before and after reporting earnings Monday, was up 5 7/16, or 5.5%, at 105. And

America Online

(AOL)

, which seems to find support whenever it slips below 100, was up 2 1/2, or 2.6%, at 100 11/16.

The other big story was the debut of

drugstore.com

(DSCM:Nasdaq). After being priced above-range at $18 Tuesday, the online drugstore opened at 65 and quickly moved to its session high of 69. But like other recent IPOs that have soared on the open, drugstore.com has traded below its opening price of 65 much of the session and was recently up 37 7/8, or 204%, at 54 7/8. The company was benefiting from a relationship with

Amazon.com

(AMZN) - Get Report

, which owns a portion of drugstore.com. Amazon was up 3 3/4, or 4%, at 104 3/4.

Not having quite the same success as drugstore.com was online sports entertainment programmer

Quokka Sports

(QKKA:Nasdaq). It was up 1/8, or 1%, at 12 1/8 recently. It has traded in a range from 11 3/4 to 15 7/8.

On the downside was

MindSpring Enterprises

(MSPG)

after the company reported earnings Tuesday. MindSpring was down 4 1/8, or 10%, at 36 1/8. MindSpring beat

First Call

estimates for its second quarter by 2 cents with an 11-cent gain. That compares to the year-ago 5 cents a share. But the company said it was embarking on an "aggressive" growth initiative in which it will increase sales and marketing spending by $45 million to $55 million over the next three quarters. Investors haven't been happy with such strategies lately; Amazon.com recently fell out of favor with investors for building its business while sacrificing profits.