Net Sector Stuck in Range, but IPOs Flourish

The sector was unable to add to Wednesday's gains as bond prices sagged. But IPOs Bamboo.com and ImageX.com soared.
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Internet stocks remained in a holding pattern, unable to substantially build on Wednesday's late rally. Higher interest rates have slowed the sector's progress.

TheStreet.com Internet Sector

index was recently up 1.26, or 0.2%, at 592.40. Treasury yields were

higher following a couple of strong economic reports. Internet stocks are hurt by rising interest rates because the present value of their future earnings falls as rates rise.

But the IPO market was showing a more healthy tone. The pricing and size of both IPOs that debuted today were lowered, which is usually a red flag but apparently has helped the two stocks in this case.

Bamboo.com

(BAMB:Nasdaq), an online provider of virtual real -state tours, was up 10 3/8, or 148%, at 17 5/16. And

ImageX.com

(IMGX:Nasdaq), a commercial printer with an online ordering process, was up 7 11/16, or 110%, at 14 11/16.

Randall Roth, an analyst with

Renaissance Capital

, said investors are more likely to invest in stocks at lower prices for the chance at a higher return later, should the Net sector become hot again.

"At $7, there's probably a lot more people willing to take a chance. But at double that, there's not as good of chance of seeing much upside," said Roth. "You're asking people to put their foot to the fire, and that's a lot to ask in this environment."

Despite the gains in Treasury yields, online financial stocks continued to flourish from beliefs that the

Federal Reserve

may be done raising interest rates this year. Over the past couple of months, many Net stocks have been beat up due to fears of rising interest rates.

TheStreet.com E-finance

index was up a strong 4 points, or 6.2%, at 68 25/32.

Among the top gainers was

Mortgage.com

(MDCM)

, up 2 9/16, or 17%, at 17 15/16. Also,

Net.B@nk

(NTBK)

was up 3 7/16, or 17%, at 23 15/16.

Among online brokerages,

Schwab

(SCH)

was up 2 1/16, or 5%, at 44 9/16;

Ameritrade

(AMTD) - Get Report

was up 1 3/8, or 6%, at 23 11/16; and

E*Trade

(EGRP)

was up 1, or 4%, at 28 15/16.

One of the hottest stocks this week,

Net2Phone

(NTOP)

, was up another 12 7/8, or 18%, at 83 1/8 today. Any number of

TSC

columnists have taken a

whack at the company. However, another scorcher,

Phone.com

(PHCM)

, was seeing some profit-taking, down 7 3/4, or 6%, at 124 1/8.

E-Loan

(EELN)

also was seeing profit-taking after more than doubling in price this week. It was down 5, or 12%, at 35 7/8, after trading as high as 45 1/2. Last Friday, the stock closed at 22 1/4.