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Tech Sector Fails to Build on Wednesday's Gains

Stocks hesitate in advance of employment report and possible rate hike.

SAN FRANCISCO -- Handcuffed ahead of Friday's employment report, the technology sector weakened late in the day, with Internet stocks unable to build on Wednesday's strong close.

Unlike yesterday when

Yahoo!

(YHOO)

led the way higher on news of a

deal with

Sprint PCS

(PCS)

, there was little news and no leadership in the group today. Traders appeared to take advantage of Wednesday's gains to unload positions before the jobs report, with interest-rate concerns still prevalent.

Despite an

upgrade to strong buy from buy from

Volpe Brown Whelan

,

Amazon.com

(AMZN) - Get Amazon.com, Inc. Report

remained weak. It closed down 7 1/16, or 6%, at 105 1/16, still shuddering from the negative article in

Barron's

over the weekend.

Other Net bellwethers closed lower as well. Yahoo! closed off 7 1/8, or 5%, at 135 3/8.

America Online

(AOL)

TheStreet Recommends

closed down 4 1/8, or 4%, at 106.

eBay

(EBAY) - Get eBay Inc. Report

closed down 7 1/2, or 4%, at 161 5/16.

In a note today,

Merrill Lynch

Internet analyst Henry Blodget addressed weakness in the Net sector and how long it may last.

"We aren't sure that the negative sentiment surrounding the sector has bottomed yet (although we are probably getting there)," he wrote. Blodget said he expected to continue to see wild volatility through the summer, and the leaders "could easily pull back another 50% or more from current levels (we don't think they will, but it is clearly possible) and the laggards much more."

But Blodget did expect Net stocks to trend higher by the end of the year. He noted that his strategy would be "to hold a small basket of the leading stocks -- ones that are either No. 1 or No. 2 in their markets and gaining market share," while limiting exposure to "a small percentage of a balanced portfolio (5%?)."

IPO Watch

One Internet IPO was launched today, but another was postponed indefinitely and a couple others were delayed until next week.

iXL Enterprises

(IIXL:Nasdaq), an Internet strategy consultant, began trading today and closed up 5 7/8, or 49%, at 17 7/8. Another IPO that was scheduled to go today was

onlinetradinginc.com

(LINE:Nasdaq). Andy Allen, CEO of onlinetradinginc.com told

TSC

that he anticipates completion of the offering by Monday and the stock to begin trading on Tuesday.

Poor market conditions were reportedly behind a decision to delay the IPO for

E-Loan

(EELN:Nasdaq), which provides mortgages online. And another Internet IPO,

USA.Net

(MBOX:Nasdaq), a provider of free email, was delayed until next week.