Net Sector Gallops Again

Ask Jeeves was the standout, rocketing on its first day of trading.
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SAN FRANCISCO -- Internet stocks rallied for the second straight day as the market chose to look ahead at what is expected to be a strong earnings season.

For a brief moment, Net stocks showed some concern about interest rates. But with the Fed doing little to discourage the stock market on Wednesday, the sector continued its strong showing.

The stock market decoupled from Treasuries, which weakened following a strong

National Association of Purchasing Management

report.

TheStreet.com Internet Sector

index closed up 23.22, or 3.8%, at 640.15 after reaching a low of 608.53 after the NAPM report.

There were a few standouts in the sector, but none stood out more than

Ask Jeeves

(ASKJ:Nasdaq). The question-answer search engine had an outstanding debut, closing up 50 15/16, or 364%, at 64 15/16. But it was only a truly grand day for investors that got in on the IPO price. Ask Jeeves opened at 70 3/4, traded to a high of 77 13/16, but spent much of its day below the opening price.

"I think we're building toward resuming the pre-interest-rate hullabaloo," Randall Roth, analyst with the

Renaissance Capital IPO Fund

says of Internet IPOs. "But it's only been a couple of offerings that have really rocketed."

Roth says there is one simple factor that is still in place and could prevent the IPO market from getting out of control -- supply and demand -- and only the strong will thrive.

"Supply is not going to go down, it can only go one way," he says. "While the market will embrace a lot of companies, those still far down in the food chain are not going to get the premiums that Nos. 1, 2 and 3 get."

Another recent IPO that took off today was

GoTo.com

(GOTO)

. GoTo.com said it had entered into an agreement with

America Online's

(AOL)

Netscape

division to become a leading search provider for Netscape's Net Search program search engine. GoTo.com closed up 8 1/2, or 30%, at 36 1/2. AOL finished up 2, or 2%, at 112.

Books-A-Million

(BAMM)

lived up to its name after the online bookstore entered into an agreement to be the exclusive provider of books and related products for

Wal-Mart

(WMT) - Get Report

. Books-A-Million closed up 6 11/32, or 84%, at 13 7/8. Wal-Mart ended down 1/2, or 1%, at 47 3/4.

RealNetworks

(RNWK) - Get Report

rallied on news the company will provide

Microsoft's

(MSFT) - Get Report

WebTV Networks

with technology to allow it to support the RealNetworks' RealAudio G2 format. RealNetworks closed up 9, or 13%, at 77 7/8. Microsoft closed up 1, or 1%, at 91 3/16.

Shares of

Lycos

(LCOS)

soared after the company said it would provide online financial services through

WingspanBank.com

, a subsidiary of

Bank One

(ONE) - Get Report

. The deal could be worth as much as $135 million to Lycos if performance thresholds are met. Lycos closed up 10 1/2, or 11%, at 102 3/8. Bank One ended up 1 1/16, or 2%, at 60 5/8.

CNET

(CNET) - Get Report

was one of the poorer-performing Net stocks. On Wednesday, the company told analysts it would spend $100 million over the next 18 months to build brand awareness, but the increased spending is expected to result in an earnings loss for 1999 vs. expectations of an earnings gain.

Deutsche Banc Alex. Brown

lowered its earnings estimates for 1999 to a loss of 50 cents a share vs. a 20-cent profit previously anticipated. That compares to a

First Call

estimate of 21 cents for 1999. CNET closed down 5 7/8, or 10%, at 51 3/4.