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Net stocks ride recent market jumps

Net stocks tumble out the starting gate in early trading as investors continue profit-taking, reaping the rewards of a market that has surged to record levels recently.

    Internet stocks, along with the broader market, continued to tumble out the starting gate in early trading as investors continued profit-taking, reaping the rewards of a market that had surged to record levels during the past few weeks.

    The Dow Jones Industrial Average fell 0.81 percent or 73.63 points, to 9,042.92. Today's downward movement comes on the heels of yesterday's 2.32 percent decline, when the blue-chip index shed 216.53 points. The Nasdaq Composite Index slid 1.05 percent, or 20.44 points, to 1,929.1.

    Although analysts had expected a market correction, most are still bullish on stocks. The Dow last week touched a record high of 9374.27.

    Internet stocks, which have gone through the roof recently on optimism that their revenues were likely to increase as more people turn to the Net to do their gift-shopping this holiday season, tumbled on frenzied profit-taking yesterday.

    "The blue chips and the Internet [stocks], the places where the excesses took place, are the places where the correction will take place," said Larry Wachtel, vice president of Prudential Securities.

    Peter Cardillo, director of research at Westfalia Investments, said the sell-off in the high-flying Internet sector was good because "it brings some sanity back into the market."

    Web stocks continued to head lower in early trading today. Web portal Yahoo shed 4.17 percent, and online computer products retailer Egghead.com sank another 15.20 percent. America Online dropped 6.78 percent, while Web auctioneer Onsale plunged 12.2 percent.

    Online book and music retailer Amazon.com, which today announced separate marketing deals with Broadcast.com and Hoover's Online, fell 4.72 percent, while Broadcast.com shed 7.39 percent.

    Other tech issues also headed lower in early trading. Dell Computer dropped 1.85 percent; Microsoft slipped 1.33 percent, and Oracle dipped 1.28 percent.

    Cardillo said he would not be surprised if the Dow fell below 9,000 but he expects stocks to move higher before the end of the year.

    "We need to test the 9,000 level before that happens," he added.

    Reuters contributed to this report.