Net Sector Steady as Cautious Buyers Survey the Scene

AOL was higher, but did not react to positive analyst comments as well as some had hoped. Red Hat has a smashing debut.
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In what may be a positive sign for the Internet sector, buyers and sellers seem to be engaged in a struggle. And Red Hat (RHAT) , though not a Net stock, was restoring faith in IPOs.

Red Hat met with boisterous demand as it went public today. The software maker recently was trading up 33, or 235%, at 47. Among Internet IPOs,

InterWorld

(INTW)

, an Internet commerce software company, was up 3, or 20%, at 18.

TheStreet.com Internet Sector

index was recently trading up 0.25 at 488.65, midway between its session range of 478.97 and 499.77. The index has had trouble holding above 500, with sellers emerging when it reached that level.

Trading has been back and forth today, providing a glimmer of hope for longs that the sector could be close to a bottom. Buying interest stemmed from the sector's ability to erase losses and close higher late in the session for two of the past four trading days.

However, Seth Tobias, managing partner with hedge fund

Circle T Partners

, said he has not seen the institutions come back in with any seriousness on the buy side, and they appear to be waiting to see the stocks build a base. Tobias said part of the sector's problem is that everyone is waiting to buy until the middle of September and the start of the fourth quarter, during which time more people are expected to go online.

Tobias said the sector also continues to get hurt from lack of leadership. He said

Amazon.com

(AMZN) - Get Report

and

America Online

(AOL)

have largely lost their leadership roles, leaving

eBay

(EBAY) - Get Report

and

Yahoo!

(YHOO)

to carry the sector. Tobias said some of the real value in the sector was among several newly public companies that were now trading below their offering prices.

AOL has been a focal point today, but Tobias said its performance was "disappointing" considering that there was a positive

note on the company from

Lehman Brothers

and two conference calls on the company by

Morgan Stanley Dean Witter

and

Sanford C. Bernstein

. AOL was recently up 1 5/16, or 2%, at 86 15/16.

Among other bellwethers, Amazon was down 3 1/4, or 4%, at 87 3/4; eBay was down 1 1/4, or 1%, at 88; and Yahoo! was off 2 1/8, or 2%, at 125 3/8.