Dot-com Giveth, and Dot-com Taketh Away

  • Share
  • Read Later
Investors may have stopped the tech stocks' bleeding Tuesday, but Monday's dramatic drop contained a cautionary tale. "This kind of thing can happen when stocks have no basis for their valuation," says TIME business correspondent Daniel Kadlec. "People going into some of these Internet stocks should be using money they can afford to lose, because the next correction may be larger and last even longer." Tech equities crept back up Tuesday, after a Monday afternoon stampede that saw the Big Board record its second highest trading volume ever -- 1.2 billion shares were traded in a few hours, resulting in billions of dollars shaved off Net stock values. NASDAQ's 138-point loss was its second worst ever. Analysts blamed everything from skittish newbies and day traders to poor earnings in tech stocks and signs of resurgent economic growth in Europe.

[an error occurred while processing this directive]
Fortune Investor Data
Monday's correction saw some of the most prized Net stocks -- America Online, Yahoo and -- fall more than $25 on the day, but that sharp drop also illustrated the sector's recent precipitous gains. America Online's $26.94 loss on Monday, for example, simply put the company's share price back to where it had been a month ago. Although the NASDAQ stocks had begun to recover by midday Tuesday, Wall Street still felt the aftershocks with the Dow down 35 points. Despite the movement away from racy Net stocks into equities of greater value stocks, the NASDAQ has the added buoyancy of the swarms of Internet bargain hunters who take any fall in the prized dot-coms as a signal to buy.