Midday Report: Nasdaq Rally Ends as Yahoo! Drags Techs Lower

The stock market’s three-day winning streak appeared to be headed for an endThursday, as earnings warnings from Web giant Yahoo! (Nasdaq: YHOO) andothers pulled the Nasdaq Composite Index down 37.51 to 2,186.41 by midday.

Overall, the market was mixed, as old-economy stocks pulled other averageshigher. The Dow Jones Industrial Average was up 39.82 at 10,769.42, and theStandard & Poor’s 500 stock index was ahead 1.62 at 1,263.51.

Yahoo!, down US$4.14 at $16.80, said after the close of trading Wednesday thatresults for thecurrent quarter will be hurt by a slowdown in spending for onlineadvertising. The company will also look for a new chief executive officer,as Tim Koogle gives up that role while remaining chairman.

Yahoo! said that it expects first-quarter revenue of $170 million to $180million, with breakeven earnings. Analysts had expected $232 million inrevenue and income of 5 cents per share.

“All businesses in the United States are facing challenging economicconditions that have weakened further in recent weeks,” Koogle said, “and asconsumer confidence and spending has deteriorated, a broad range ofcustomers have delayed their spending across all media formats until theireconomic outlook improves.”

E-Commerce Drop

The E-Commerce TimesIndex was down 2.19 percent at midday. Webvan (Nasdaq: WBVN), Egghead(Nasdaq: EGGS) and eBay (Nasdaq: EBAY) were lower, while Travelocity(Nasdaq: TVLY) and Drugstore.com (Nasdaq: DSCM) were higher.

Homestore.com (Nasdaq: HOMS) was up 6 cents at $28.50 following reportsthat analysts at Wit SoundView upgraded the stock to strong buy from buy.Earlier this week, Goldman Sachs gave the stock a boost when it addedHomestore to its recommended list.

Amazon.com (Nasdaq: AMZN) was down 38 cents to $11.88. Amazon has remained silent on rumors of a potential partnership with retail giant Wal-Mart (NYSE: WMT). However, a top Amazon executive said Wednesday that the e-tailer is interested in linking with brick-and-mortar stores.

CNet, Tibco Warn

CNET Networks (Nasdaq: CNET) fell $1.38 to $9.19 after it also warned thatresults would fall below expectations. CNET, which owns Web sites providing online content and Internet services, also blamed a slowdown in ad spending.

Other technology companies warning of weak results were Tibco Software(Nasdaq: TIBX), Cree (Nasdaq: CREE) and Tellabs (Nasdaq: TLAB).

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