Internet Bellwethers Mostly Firmer in Early Trading

Despite uncertainty in the sector early on, Net stocks are setting a positive tone for the rest of the market.
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The performance of Internet stocks following the

Federal Reserve's

decision to raise interest rates Tuesday was disappointing, and investor uncertainty resurfaced in the sector early today.

TheStreet.com Internet Sector

index was up 2.57, or 0.5%, at 566.36, in early trading after climbing as high as 572.63 early in the session. Strength in the Treasury market was fueling gains in stocks, as was optimism that the Fed has finished raising rates for this year.

Net stocks appeared poised to take off after the Fed moved pretty much as expected Tuesday, but as

TSC's

James Cramer

pointed out in a piece earlier

today, even the best-laid plans can go awry when it comes to trading.

Net bellwethers were mostly firmer and were helping set a positive tone for the rest of the market.

Amazon.com

(AMZN) - Get Report

was up 2 13/16, or 2%, at 122 7/8;

Yahoo!

(YHOO)

was up 2 1/2, or 2%, at 155 7/16;

America Online

(AOL)

continued to struggle at the 100 level, up 1 5/8, or 2%, at 100 3/8; and

eBay

(EBAY) - Get Report

was up 3 1/4, or 3%, at 122 1/8.

Also of note, shares of

Liquid Audio

(LQID)

were up 3 1/2, or 13%, at 30, after the company said that it had released a new version of its software for delivery of music over the Internet. The new format will support all leading digital music standards, including mp3 and

RealNetworks

(RNWK) - Get Report

.

Merrill Lynch

had a note out on

Circuit City

(CC) - Get Report

this morning that had references to Amazon.com's recent entry into the consumer-electronics field. Analysts wrote that a study of Amazon's offering and pricing in consumer electronics "gives us little concern in that category."

Analysts noted that an average basket of goods at Circuit City stores "actually costs 0.3% less than Amazon's current pricing, as consumer electronics, unlike books, are already aggressively priced at retail stores." They added that they "believe Amazon will gain only limited share" in the consumer-electronics category given limited offering.

Bricks-and-mortar vs. e-commerce also was the subject of a note this week from

Robinson-Humphrey

. In their weekly Internet update, analysts there wrote that they are bullish about the upcoming holiday season, "but caution that expectations for similar types of growth rates as last year's e-Christmas (Amazon.com's sales rose 65% in the fourth quarter of 1998 from the third quarter of 1998) are probably unrealistic."

They noted that "bricks-and-mortar competition has awoken" and "are poised to present formidable competition this e-Christmas." They added that the bricks-and-mortar players should not be ignored because of widely publicized problems with the

Toys R Us

(TOY)

Internet division, and claimed that established brand names deliver customers.

The analysts remained positive on Amazon.com, however, saying they expect it to emerge as one of the top three Internet retailers that will have long-term viability in e-tailing.