To everyone's surprise, Brazil restored some credibility to its currency Friday and sent the Brazilian stock market soaring. This had a predictably positive effect on Wall Street, where share prices finally headed north in mid-afternoon trading after three days of losses.
To absolutely no one's surprise, a new Internet stock, MarketWatch.com, debuted on the market and promptly went through the roof.
The Dow Jones Industrial Average gained 141.86 points to 9262.79, and the S&P 500 was 20.08 higher at 1232.27. The Nasdaq Composite Index rose 42.14 to 2318.96, and the Wired Index was up 19.01 at 607.50.
The key factor here is Brazil's decision not to throw tons of cash at propping up its sagging currency, the real, and to instead allow it to settle wherever the market deems appropriate. This will allow Brazil to devote its scarce dollar reserves to much-needed efforts to restructure the country's economy, not to mention keep mailing off checks to cover international debt obligations.
Brazilian stocks surged as investors stopped siphoning funds from the market, and Wall Street followed suit, with share prices up pretty much across the board. The sense of relief among traders was readily apparent as the market headed toward a strong finish prior to the long holiday weekend. US financial markets will be closed Monday for Martin Luther King Jr. Day.
For day traders and other individual investors, Brazil was merely a blip. The big news instead was the arrival of financial-news provider MarketWatch.com (MKTW), which started trading in the early afternoon at an initial price of US$17 a share. Within minutes, the stock was up $95.50 at $112.50.
Lise Buyer, an analyst with Credit Suisse First Boston, was unfazed by the notion of yet another Net IPO going stratospheric. "The entire Internet space is going to be really volatile for the near term," she said.
Part of the reason, Buyer added, is because Net stocks have little if no exposure to overseas turmoil, providing an extra lure for investors. "I would hate to use the term 'safe haven' considering these valuations," she said. "But most of these stocks are insulated from immediate risk."
In MarketWatch's case, it has all the qualifications for a superior Internet play: strong content, millions of visitors to the site each month, and millions of dollars in losses. Why shouldn't this company have a market value of more than $1 billion?
Speaking of things that go bump in your portfolio, eBay (EBAY) advanced 69 cents to $226 after saying it's going to crack down on fraud and other such shenanigans at its online auction house. CEO Margaret Whitman said that "eBay has zero tolerance for fraud."
There.
Video software maker RealNetworks (RNWK) jumped 16 percent to $58.25 on news that it will team up with cable-based Net access provider AtHome Network (ATHM) to develop a new generation of streaming video clarity. Anyone watching the marionette shows now passing for online video will appreciate the importance of such a prospect. AtHome was up $1.88 at $104.50.
The bidding war for AirTouch Communications (ATI) looked to be rekindling as the Financial Times reported that Bell Atlantic (BEL) will top the $55 billion on the table from Britain's Vodafone Group (VOD). Vodafone in turn may boost its bid, the paper said. AirTouch rose $3.31 to $82.13, while Bell Atlantic slid $1.81 to $52, and Vodafone was up $1.25 at $175.81.
Tech shares were broadly higher. Dell Computer (DELL) gained $1 to $78.63, and Intel (INTC) was $2 higher at $135.75. Cisco Systems (CSCO) climbed $3.31 to $99.69, and Microsoft (MSFT) was up $2.88 at $144.63.
