Older Internet Stocks Lose Spark, But Other Web Names Grab Torch
Older Internet stocks still are swinging, but they aren't leading the band anymore. As the Nasdaq Stock Market has romped to repeated new highs in recent weeks, it has done so without the help of many Internet stocks that had been so hot in April.</br></br>The Dow Jones Internet Composite Index, though up 59% since its August low, remains 15% below its peak of mid-April; the Nasdaq Composite Index is up 22% in the same period. Hardly any of the stocks in the capitalization -- weighted Internet index now trade anywhere near those highs. America Online and Yahoo! both trade within 20% of their peaks, but the average of the index's 40 components still was down 38% from its 52-week high as of Thursday.</br></br>With three Internet-related initial public offerings of stock in the past three weeks rocketing into the ranks of the top five first-day gains ever, it is clear the Internet party isn't over. It has just moved to a different neighborhood, leaving some lonely guests at the old one.</br></br>"This time last year, e-tailers a la Amazon.com were all the rage," says David Simons, managing director of Digital Video Investments, an investment-research and advisory firm in New York. "Now e-tailers, led by Amazon's petulant preference for expansion over profit, are passe, and now it's b-to-b [business to business commerce] and networking."</br></br>Of course, with the broad market rallying, some big Internet "blue chips" could well soon achieve new highs. Signs of modest economic activity and low inflationary pressure helped the Dow Jones Industrial Average soar 174.02 points, or 1.64%, to 10769.32 on Friday, although uncertainty remains on whether the Federal Reserve will raise rates when its policy-making body meets tomorrow. The Nasdaq composite gained 23.86, or 0.75%, to 3221.15, its third consecutive record and its 10th in 11 days. For the week, the Dow industrials gained 64.52, or 0.6%; Nasdaq rose 118.86, or 3.8%.