Watch for large caps to bounce past techs on Wednesday. Asia and Europe were mixed. The Dow is set to open slightly higher.
The stock market will begin to right itself on Wednesday with most of the bad news from the financial sector digested and some economic data that points towards an economy still on course. This may not rub off on the technology sector, which has seen the worse of this recent downturn.
Watch for large caps, stocks in the Dow 30 and the S&P 500 to outperform tech shares and small caps in the short term. Techs will likely rebound, but it's uncertain what, if any, catalyst is necessary to curtail the present sell-off.
Now, to dispel a misconception: demand for Net initial stock offerings is waning. First off, many IPOs are offering a greater number of shares. Barnesandnoble.com Inc. (Nasdaq: BNBN) sold 25 million shares. Broadcast.com Inc. (Nasdaq: BCST), in contrast, sold only 2.5 million shares in its first outing in July. There is a smaller boost in shares in the first few days trading because there's a greater supply.
Also, If demand were truly waning, companies would not be able to raise their price ranges then price issues at the tops of the range. That is a sign of strong demand and a sign that Wall Street embraces the Internet as a viable business medium.
There is also a greater supply of IPOs, such as the three offerings slated to begin trading. Attention is diluted across a number of issues. These IPOs are then quickly brushed aside by another set of issues set to trade the next day. When was the last time you heard anything about EarthWeb Inc. (Nasdaq: EWBX), which went public in November?
Keep in mind that the primary reason companies go public is not to get investors rich, but to raise money. If the stock goes through the roof, it's a positive thing, to be sure. However, the company collects its money from an IPO the night before an offering, from the offering price, not the opening price.
Stocks to watch for Wednesday: DLJDirect goes public, Intuit beat estimates, Juno Online begins trading, MindSpring Enterprises declared a 2-for-1 split, Novell topped expectations and Star Media opens later today.
On Tuesday, Internet and hardware stocks were slammed again. The Nasdaq composite shed 73 points to 2,380.78 while the Dow Jones industrial average fell 124 points to close at 10,531.09.
The Inter@ctive Week @Net Index plummeted 16 to 279 on Tuesday.
At the Bell
The Dow Jones industrial average is set to open higher. The Standard & Poor's 500 index for June futures contracts rose 8.5 points to 1,293 at 7:22 a.m. EST in 24-hour electronic trading, are indicating a 69-point gain in the global bellwether.
Asia was mixed as the sell-off in the U.S. continued on Tuesday. The Nikkei 225 in Tokyo edged up 0.1 percent to 16,230, the Seoul composite in South Korea gained 3.06 percent to 720, Singapore's Strait Times index dipped 0.13 percent to 1,893 and Hong Kong's Hang Seng added half a percentage point percent to 12,409.
European markets barely budged. London's FTSE 100 dipped 0.06 percent to 6,245, the CAC 40 in Paris lost 0.16 percent to 4,366 and the Xetra DAX in Frankfurt gained 0.19 percent to 5,175 at 7:58 a.m. EST.