Tech stocks were higher Tuesday after being thoroughly devastated a day earlier. Investors were shopping for bargains among some of the bigger names, and many traders, amazingly, were plunging back into bloated Internet shares.
Generally speaking, though, the market remains weak and battle-scarred, and nobody thinks the worst is over for tech and Net outfits.
The Nasdaq Composite Index, which posted its second-biggest point drop on Monday, rose 48.71 to 2394.32 in midafternoon trading. Most observers had expected the index to bounce back somewhat after falling so hard. Few believe the gains will last long.
The Dow Jones Industrial Average dropped 13.74 to 10426.79, remaining in the minus column after last week's string of record-high closes. The Wired Index gained 4.87 to 624.78, and the S&P 500 was up 13.57 at 1303.05.
"People over the last week or so have recognized that there's more to life than just chasing momentum," said Brian Belski, chief investment strategist at George K. Baum & Co. "Some of these ultra-high-growth stocks have been up for so long, the potential is very high for disappointment."
For this reason, he expects the retreat from technology and Internet shares to continue, possibly for the next four or five months. And in a way, Belski figures that this is a good thing for Wall Street.
"People are returning to bare-bones investing," he said. "They're looking for companies with quantifiable revenues, not ones trading at 50 or 60 times earnings, or more. This is very positive from a macro view of the market."
That said, Belski acknowledges that there are still some pretty attractive stocks out there among the techs and dot coms, particularly those with established leadership in their group. Microsoft (MSFT), for example, may be trading at nearly 70 times earnings, but the company has the muscle to carry to such a hefty multiple. The software giant, which is slated to report its quarterly results after the closing bell, advanced US$1.38 to $82.38.
Meanwhile, Texas Instruments (TXN) shed $2.56 to $102.44 even as it posted stronger-than-expected earnings for the first quarter. With a 16-percent hike in revenue under the belt, the company's profit came in at 65 cents a diluted share, excluding charges. This was 4 cents ahead of estimates.
Net stocks were back in the black as analysts cranked out the "buy" recommendations following Monday's double-digit declines. Investors cheerfully wiped the blood and body parts from their clothing and returned for more.
RealNetworks (RNWK) was among the highest climbers, rising 28 percent to $164.75 after tumbling 25 percent a day earlier. The company is due to announce its first-quarter results after the market closes, and a loss of 3 cents a share is anticipated. But there's already whispering on the Street that RealNetworks might not only top this number, but could even turn a profit. Revenues are expected to be up more than 70 percent from a year ago.
And ETrade Group (EGRP) jumped 25 percent to $92.38 as it boasted of a smaller-than-expected loss for the quarter. The online broker's 12-cents-a-share setback was a nickel ahead of estimates, and its revenue doubled. ETrade said that it added another 233,000 accounts over the past three months, and credited a $60-million ad campaign with raising its visibility.
