Poor earnings results by big names such as Amazon.com and cautious words by the Fed kept the market in the red in midday trading Thursday.
internet.com’s Internet Stock Index dropped 23.97, or 4.56 percent to 501.48 at midday. The Nasdaq Composite fell 67.16 to 2694.61 and for the second straight day the Dow Jones industrial average slipped 70.29 to 10932.4896.
Remarks made by Fed Chairman Alan Greenspan to the House Banking Committee did not help the fallen stocks. While investors were anticipating good news, Greenspan offered more warnings than expected, leaving investors wary.
He warned that the economy may be growing too quickly, and the Federal Reserve may be forced to raise interest rates preemptively.
“If new data suggest it is likely that the pace of cost and price increases will be picking up, the Federal Reserve will have to act promptly and forcefully so as to preclude imbalances from arising that would only require a more disruptive adjustment later,” he said.
In addition to Greenspan’s comments, Net stocks such as Amazon.com (AMZN) and America Online (AOL) led the decline of online companies. Amazon.com released its earnings yesterday, taking a loss of $.51 per share, in line with estimates. Along with its earnings, the company also announced a 2-for-1 stock split and plans for more spending. Its stock dropped 16-9/16 to 108-7/8 by midday.
AOL had better-than-expected profits for the second quarter of $.13 per share and revenue of $1.4 billion. Still, its stock fell 4-1/4 to 110-13/16 Thursday afternoon.
On the up side, barnesandnoble.com (BNBN) is seeing the benefits of its better than expected earnings report. The company posted a narrower-than-expected loss of $.17 per share, beating estimates of $.24. Its second-quarter sales more than doubled to $39.1 million. It was trading up 1/2 at 19-1/2.
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