SAN FRANCISCO -- They're back!

Internet stocks, that is. Ease interest-rate worries and the Net sector gets back in favor with investors.

Barry Hyman, senior market analyst with

Ehrenkratz King Nussbaum

, said the tame

Consumer Price Index

report this morning "takes away some of the valuation concerns" among Internet stocks. Hyman said he believes the worst is over, particularly if the inflation numbers limit the Fed to one interest-rate hike.

"I think you've seen the bottom of this move, at least from an interest-rate perspective and an oversold perspective," he told

TSC

.

Hyman said margin-related selling in the sector on Monday looked "climactic," perhaps marking the end of the recent decline. But Hyman warned that investors in Net stocks looking for the old days of triple-digit returns in a short period of time need to scale back expectations. He said what is different now is that there are other sectors of the market that are also hot and investors do not have to rush to high-risk Net stocks to get good returns.

"We're at the beginning of a decent short-term rally, but I don't expect the same exaggerated action we've seen in the past," he said, suggesting investors stick to the larger-cap Internet names.

Larger-cap names were faring well, as were smaller Net names.

TheStreet.com Internet Sector

index was up 37, or 7%, at 541.08.

Among the big names,

Yahoo!

(YHOO)

was up 14 3/8, or 11.5%, at 139 5/8;

Amazon.com

(AMZN) - Get Amazon.com, Inc. Report

was up 10 1/4, or 11%, at 106 3/4 and

America Online

(AOL)

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was up 10 1/4, or 11%, at 105.

Inktomi

(INKT)

, which

unveiled new search engine technology on Tuesday, was up 17 7/8, or 19%, at 108 3/8.

Even some Net companies that have been out of favor were faring well.

eBay

(EBAY) - Get eBay Inc. Report

was up 10 1/16, or 7%, at 145 9/16, while

@Home

(ATHM) - Get Autohome, Inc. Sponsored ADR Class A Report

was up 9 1/16, or 11%, at 89 1/8.

And it turned out to be a perfect day for

CareInsite

(CARI:Nasdaq) to go public. The Internet-based healthcare and e-commerce company was up 14 1/4, or 79%, at 32 1/4 in its first day of trading.

Gains were not limited to the Internet sector.

Oracle

(ORCL) - Get Oracle Corporation Report

continued to bask in the glow of its earnings report, which bested estimates by 4 cents. It was trading up 6 7/8, or 27%, at 32.

Intel

(INTC) - Get Intel Corporation (INTC) Report

was up 3 5/16, or 6%, at 59, while

Micron Technology

(MU) - Get Micron Technology, Inc. (MU) Report

was up 3, or 7%, at 46 1/4.