U.S.

Stocks: The Wild Ride Continues

By CBSNews.com staff CBSNews.com staff

March 31, 2000 / 9:39 PM EST / CBS

On Wall Street, stock prices closed mixed Friday. The Dow lost 58 points. The battered NASDAQ rallied, closing up 114. So, at the end of the first quarter of 2000, the Dow is down five percent, the NASDAQ up, more than 12. CBS News Business Correspondent Anthony Mason reports that despite the risk, investors are betting on Wall Street, and in record numbers.

Americans continued to pour money into the market in the first quarter, into mutual funds and especially into technology stocks.

"It's where the growth is. It's where the future's gonna be," says one investor.

So at Charles Schwab, the country's largest discount broker, co-CEO David Pottrick says "We will come close to $10 billion going into funds in the first quarter of this year. And we had only a little bit more than $10 billion going into funds all of last year."

The tech heavy NASDAQ roared ahead 12 percent in the first quarter. But investors fell out of love with some once-glamorous Internet stocks. Look at drugstore.com, eToys and CDNow. All down more than 60 percent this year. Merrill Lynch's Henry Blodgett says a shakeout has begun in the Internet sector.

"So we'd look for 75 percent of the companies to either sell themselves, go out of business or otherwise disappear over the next five years," Blodgett says.

One of those casualties could be drkoop.com. The Web site backed by the former Surgeon General fell 40 percent Friday after an independent auditor questioned the company's "ability to continue as a going concern." From a high of 43 last summer, it has fallen to $3 a share. Says one investor, "It's insane, why something is 50 percent less a week after you bought it. But you have to just go with the flow, you know."

Hang on, because according to David Pottrick, there's going to be "Lots of movement. Lots of volatility. And I think that volatility is here to stay."

Do that mean there's been a fundamental change?

"A fundamental shift, absolutely," says Schwab's co-CEO.

Pottrick says it's the Internet investor who's changed the game. Already in the first three months this year, the NASDAQ has closed up or down a hundred points or more exactly thirty times.