Net Stocks Still Under Pressure as Rebound Falters

The market can't seem to shake rate fears brought on by today's economic data.
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SAN FRANCISCO -- Earlier today, Internet stocks appeared to be stabilizing and even showing signs of a rebound after this morning's breakdown, but recent market activity suggests the worst may not be over.

TheStreet.com Internet Sector

index recently hit a session low, trading down 29.66, or 5.1%, at 554.66. The session high was 568.94, made around 10 a.m. EDT. Losses have stemmed from increased fears of rising interest rates after various economic data were released this

morning.

Barry Berman, managing director of equity trading with

Robert W. Baird

, said that it seemed like the weakness in the market "will be here for a while," and he expected traders to continue selling into any strength rather than buying into weakness. It will only stop, he said, when selling volume dries up and buyers can come out of their shells.

"The news was pretty significant this morning, and I think it's going to take people a while to establish a level to make any kind of up move again," he said.

Federal Reserve

Chairman "

Alan Greenspan

told everyone what he's concerned about, and what he's concerned about happened."

Dick Dickson, technical analyst with

Scott & Stringfellow

, said relatively light volume seen through midsession does not suggest panic in the market -- yet.

With TheStreet.com index falling below support around the 595-to-600 area that Dickson mentioned last

week, he said it now looks as though the index will test its 200-day moving average around the 500 level, which is also right around the June 15 low of 495.17. He said technicians still see the DOT in a sideways trading pattern, but if that level does not hold, it will be seen in a downtrend.

As for how long the weakness will persist, Dickson admitted he has few answers. Many technicians like to see a blowout day when people panic, followed by a nice bounce back as indicative of a bottom being in place.

He said a slower, low-volume push lower, as has been seen over the past few weeks, does not suggest a bottom is coming. Dickson said a sector also needs to lead a recovery. He added that the technology sector is one that has been a huge contributor to new heights, but some uncertainty still exists about whether technology could lead the market with Y2K approaching.

Big names continued to lead the way lower.

Yahoo!

(YHOO)

was down 7 3/8, or 5%, at 135 5/8 in recent trading.

Exodus Communications

(EXDS)

was off 8 7/8, or 7%, at 124 1/2.

Inktomi

(INKT)

slipped 8 3/4, or 8%, at 102, and

CMGI

(CMGI)

was down 6 3/16, or 6%, at 91 15/16.