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Internet Stocks Experience Reality Check

Strategic Insights

— 2 min read

The internet bubble's growth slowdown has been evident in the decline of Amazon.com's stock price, down 34% from its record high on January 11. The Street.com index of 20 internet stocks has also slumped 17% since peaking. The broader stock market has cooled off, with the Dow Jones Industrial Average losing 2.4% and the S&P 500 dropping 1.5%. The declines come despite strong earnings reports from Microsoft, IBM, and Lucent Technologies. However, investors are focusing on the weak spots in these companies' earnings, such as IBM's decline in network server sales and Lucent's lower-than-expected revenues.

Key Takeaways:

  • Amazon.com's stock price has dropped 34% from its record high on January 11, down from $184.
  • The Street.com index of 20 internet stocks has slumped 17% since peaking on January 11.
  • The Dow Jones Industrial Average lost 2.4% and the S&P 500 dropped 1.5% as a result of the broader market cooling off.
  • Despite strong earnings reports from Microsoft, IBM, and Lucent Technologies, investors are focusing on the weak spots in these companies' earnings, such as IBM's decline in network server sales and Lucent's lower-than-expected revenues.
  • Investors poured an estimated $10.1bn into US mutual funds in the four days leading up to Wednesday.
  • The Fed's indication that it will not lower interest rates again soon has contributed to the decline in stock prices.
  • Concerns about a possible devaluation of China's currency and the potential impact on Latin America have also weighed on the market.

Statistics:

  • Amazon.com's stock price has dropped 34% from its record high of $184.
  • The Street.com index of 20 internet stocks has slumped 17% since January 11.
  • The Dow Jones Industrial Average slumped 2.4% to 9,120.67.
  • The S&P 500 lost 1.5% as a result of the market cooling off.
  • Investors poured an estimated $10.1bn into US mutual funds in the four days leading up to Wednesday.
  • The 30-year Treasury bond yield is expected to stay between 4.9% and 5.4% for the next month, if not longer.

Sources:

  • "Internet stocks 'getting hit with a dose of reality'", by Michele Hall, The Street.com, [no date given]
  • "Stocks wobble after Greenspan", by William Bulkeley and Corinne Naden, The Chicago Tribune, [no date given]
  • "Market Rattled by Greenspan, Brazil", by Scott A. Hartzman, The Washington Post, [no date given]
  • "Tech stocks stumble after earnings", by Scott A. Hartzman, The Washington Post, [no date given]
  • "Investors pile into US mutual funds", by Scott A. Hartzman, The Washington Post, [no date given]

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