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

The stock market's three-day winning streak appeared to be headed for an end Thursday, as earnings warnings from Web giant Yahoo! (Nasdaq: YHOO) and others 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 averages higher. The Dow Jones Industrial Average was up 39.82 at 10,769.42, and the Standard & 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 that results for the current quarter will be hurt by a slowdown in spending for online advertising. 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 $180 million, with breakeven earnings. Analysts had expected $232 million in revenue and income of 5 cents per share.

"All businesses in the United States are facing challenging economic conditions that have weakened further in recent weeks," Koogle said, "and as consumer confidence and spending has deteriorated, a broad range of customers have delayed their spending across all media formats until their economic outlook improves."

E-Commerce Drop

The E-Commerce Times Index 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 reports that analysts at Wit SoundView upgraded the stock to strong buy from buy. Earlier this week, Goldman Sachs gave the stock a boost when it added Homestore 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 that results 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).