Net Sector Teeters Ahead of Fed Report

SAN FRANCISCO -- The Internet sector was mostly lower after Monday's late recovery, and that weakness most likely reflects fears that the Fed will raise interest rates or adopt a tightening bias, thereby dealing a blow to those companies still looking to grow into sky-high valuations. But a select few Net stocks are bucking the trend.

Lycos

(LCOS)

was higher ahead of its earnings report, scheduled for release after the close. It is expected to report a loss of 3 cents a share. Lycos also said today it will purchase up to a 9% stake in online auctioneer

FairMarket

, which will work with Lycos to build an infrastructure to power Lycos' online auction offering. Lycos was up 3 1/2, or 3%, at 112.

eBay

(EBAY) - Get Report

, which faces competition in the auction business, was off 2 7/8, or 1.5%, at 195 9/16.

Also posting gains was

Tut Systems

(TUTS)

. The company said it had entered into an agreement with

Post Properties

(PPS)

to deploy high-speed Net access to residents of Post's apartment developments. Tut designs, develops and markets products that enable high-speed data access over the copper infrastructure of telephone companies. The companies will partner with

AT&T

(T) - Get Report

and

Cisco Systems

(CSCO) - Get Report

to deliver a complete Internet access solution for Post Properties. Tut Systems was up 4 1/2, or 10%, at 49 3/4.

Net Perceptions

(NETP)

, which provides marketing solutions for Internet retailers, was up 1/16 at 24 1/2, coming down from its session high of 27. The company went public April 23, and its underwriters

BancBoston Robertson Stephens

and

Hambrecht & Quist

initiated coverage today with buy ratings.

On the IPO front,

Redback Networks

(RBAK:Nasdaq) was up sharply in its first few minutes of trading. The provider of broadband access networking systems was up around 45, or close to 200%, at 68.