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Dismal conditions returned to the Internet sector Tuesday after a few days' reprieve.

The latest downturn, which comes a day ahead of

America Online's


scheduled release of fiscal first-quarter financial results, continues the Net-stock slide that started in early September. The steep selloff has Net investors trying to decide what might be left standing when the selling eases. Judging by the market action, so far they're coming up empty.

Tech stocks skidding since Sept. 1

Among the big losers Tuesday were AOL, down nearly 15% to $44.86 in afternoon trading;



, down about 12% to $48.69;

Disney Internet Group


, down 15.4%, and Internet service provider

Prodigy Communications


, down 12.5%.

Online advertising stocks got hit hard, too:





fell 17.2%, and

24/7 Media


lost 20.6% of its value.

Internet investors may have thought they swallowed all the bitter pills in the medicine chest after the huge decline in technology stocks this spring. But once-ignored questions about profitability and growth prospects for Internet-based businesses have taken root, further dimming the outlook for these once promising stocks. Now, with a looming ad-spending slowdown sending these stocks plunging, the question is, When will it stop?

Holding Pattern?

One idea, particular to Internet stocks like Yahoo! and Internet advertising firm



(itself down 11.3% on Tuesday), is that the stocks will be in a holding pattern until at least the second quarter of next year, when, those companies and their investors hope, the online advertising market will recover from its current slump.

That "dead money syndrome" makes a sort of sense, says one technology money manager who spoke on condition of anonymity. "If, in fact, DoubleClick's business does get materially better in the second quarter, the stock will be up before then. ... But I think the concept is right."

Nancy Casey, general partner of

Valhalla Capital

, attributes some of the negative sentiment to the dearth of information about Net plays. "You're in this huge vacuum," she explains. "The downside is even worse because we're all in the dark."

In past years, Casey recalls, the firm now known as

Deutsche Banc Alex. Brown

held its annual technology conference in early October, giving professional investors a chance to ask the questions they wanted to ask management of various tech firms. But this year, as last, the Alex. Brown conference will be in November.

Jeepers Creepers

Or maybe what's happened since September is one of those phenomena in which the market reacts to changing world conditions before commentators on the market have articulated that a change is taking place. That's one of the possible scenarios proposed by Paul LeCoque, portfolio manager of the

LongView Science & Technology Bellwether

fund. "Maybe the market sensed tensions in the Middle East," he said. But why did this happen Sept. 1? "I have no idea," he says. "It's just creepy."

And it gets creepier.

"You have to assume it's not over yet," says the technology money manager. "People are really confused. ... They'll be going to where they're comfortable, or where they think the momentum could be the rest of the year."

But, the manager adds, "That could be a trap. Things that are very expensive ... I don't think they'll outperform" over the rest of the year.