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Google shares take a beating despite market rally

Search giant's stock falls nearly 5.5 percent, despite a rise in the broader markets. Is Google's boat caught in a perpetual swell?

Google's share price took a beating Monday, pushing it down nearly 5.5 percent despite a sudden lift in the broader markets as the government stepped in to bail out mortgage lenders Freddie Mac and Fannie Mae.

Google, which enjoyed a long run as an Internet darling with a soaring share price following its IPO, has lost 17.6 percent of its value since mid-August, with nearly a third of that loss occurring Monday.

Google closed the regular trading session down 5.47 percent to $419.95 a share. Earlier in the day, the Internet giant's share price dipped as low as $417.55 per share, inching closer to its 52-week low of $412.11.

"I can't point to any one thing, but there are four things that you probably could say contributed to (today's) decline," said Jason Helfstein, a media and Internet analyst with Oppenheimer & Co.

Topping the list, Helfstein and several other analysts, pointed to an announcement over the weekend by the Association of National Advertisers, which called on the U.S. Department of Justice to block the controversial Google-Yahoo advertising search deal from going through.

"Google doesn't stand to make a lot of money from the (Yahoo) deal, but if it's rejected, Yahoo may have no choice but to sell to Microsoft and that wouldn't be good for Google," Helfstein noted.

Yahoo, meanwhile, closed up 1 percent at $18.26 a share.

Also playing a potential role in pushing Google's stock against the tide was a report in the Financial Times on Saturday that carried the headline: "Android launches with big goals but the buzz is missing," noted Helfstein.

Over the weekend, a number of blogs chimed in with similar sentiments and noted Google's Android software was not powerful enough to challenge Apple's iPhone, said Jeff Lindsay, an analyst with Sanford C. Bernstein.

Investors who were keeping an eye on the technical trading factors behind Google's stock may have been scared off for several reasons, analysts note.

"The stock broke through the $440 a share support level and once it broke through that level, it declined rapidly," said Clayton Moran, an analyst with the Stanford Group. "It's purely psychological...People will be looking for the next support level and it's $412 (a share) and we're almost there."

Google opened its regular trading day Monday at $452.02 a share.

Helfstein, however, said he believed that investors trading on technical factors were lightening up on their technology investments and reallocating their funds toward financials.

And, lastly, continuing concerns about the general economic malaise and its affect on Google could have played a role, analysts said, though added that this has been a pressure point a number of companies have been feeling.

"Google is a momentum stock and, traditionally, high-flying stocks are volatile," Moran said. "What is driving the stocks and Google down is a global slowdown. We hear bad things about the European economy and the dollar strengthening, which will likely impact Google in the near term."