Internet stocks held true to form Monday, dropping sharply as bonds continued to sell off.
TheStreet.com Internet Sector
index dropped 22.19, or 3.9%, to finish at 551.80. The long bond slid more than a point as its yield soared back above the 6% level amid questions over whether the
is done raising interest rates. Internet stocks are particularly susceptible to rises in interest rates because of their rich valuations.
And Dick Dickson, technical analyst with
Scott & Stringfellow
, cautioned that talk of weak volume in the market Monday amounted to nothing more than a smokescreen.
"Don't pay attention to the low-volume argument," he said. "That's a trap. Anybody who's been in a bear market knows that's what you hear day after day. Then after it's been down for three weeks you say, 'Who cares?'"
Dickson said the Net sector was still overbought on a short-term basis and was working some of that off. He said he looks for stability in the DOT at around 525. That level would mark a 50% correction from the heights of August's 150-point gain, which took the DOT from around 450 to just above 600.
The analyst said the DOT may also pause around 543, which would mark a 38% correction from August's high. If the DOT slips below 525, he added, the chances increase "tremendously" that the index could slip below its Aug. 5 low of 452.90. Dickson said he still thought the sector was seeing a correction in a bull move, but he's standing on the sidelines to see how far it falls.
Net stocks closed weaker across the board.
, which was the subject of a column by
today, closed down 9 1/4, or 7%, at 119 1/4.
gave up 5 3/16, or 3.5%, to 143 13/16;
slid 5 13/16, or 6%, to 93 5/16; and
dropped 7 13/16, or 6%, to 119 7/16.
Already hit by interest-rate concerns, financial stocks were pummeled from all sides.
online-trading service was down for about an hour Monday when its Web site failed for a still-unidentified reason. The company said that from about 11 a.m. EDT until a little after noon, investors had to call in their trades over the telephone. As to the cause, a company spokeswoman says the firm is looking into that now. Schwab closed down 3, or 7%, at 38 1/4
closed down 1 1/4, or 6%, at 20 1/16 on a day when its chairman and co-chief executive, J. Joe Ricketts, filed with the
Securities and Exchange Commission
to sell an estimated $4.5 million worth of shares in an
Also of note,
closed down 12 13/16, or 19%, at 54 11/16. And
, which went public last week, closed down 5 3/8, or 23%, at 18.
On a day when much of the sector suffered, two Net stocks certainly outperformed, but needed some assistance.
, a provider of services to companies setting up Internet commerce, closed up 11 1/16, or 22%, at 63 11/16 after
Morgan Stanley Dean Witter
upgraded the stock to outperform from neutral. And
Internet Capital Group
closed up 5 3/8, or 10%, at 58 7/8 after brokerage firms that underwrote its IPO initiated coverage.
closed up 1 3/8, or 3%, at 48 1/4 after the company said its subscriber base was growing ahead of expectations.