Yahoo dealt a blow to the internet advertising sector on Tuesday, warning that demand weakness would reduce earnings in the latest quarter.

Yahoo execs referred to a slowdown in online display advertising business in sectors such as automobiles and finance, and said that its search advertising business would also be affected, reports the Financial Times. The comments suggested that Yahoo was becoming more susceptible to cyclical economic forces. But there's no real reason for concern according to at least one source in automotive advertising sector.

"The market for auto ad inventory is robust, with some seasonality. Auto ad spending is always lumpy as it heavies up during new model launch periods. The first two months of Q3 were lighter on launches but Q4 and 2007 are heavy for launches. Online 2007 ad inventory is already being committed to at volume and rate both higher than anticipated," according to Jumpstart Automotive Media CEO Mitch Lowe.

But, as with an earlier warning from Yahoo that its new ad platform was running behind schedule, the market reacted badly. Yahoo shares slumped, as did those of Google and eBay. Signs of potential problems in both search and display advertising have pushed Yahoo shares down 35 percent this year.