Battered media stocks and major indexes bounced higher Monday, reversing course after opening in the red on the first trading day of the fourth quarter.
A correction, however brief, was due. The Nasdaq and the S&P 500 surrendered significant ground for the first three quarters of 2022 – their first such losing streak since the financial crisis in 2008. The Dow hasn’t done as badly over that timeframe since 2015. September was especially brutal, with the DJIA, S&P 500 and tech-heavy Nasdaq down, respectively, 8%, 9.3% and 10%. Tech stocks took a real beating.
All three gained sharply today as the Dow closed up 765 points with advances across sectors.
Dish is up by 7% and Disney by 3%. The two just resolved a carriage dispute.
Lionsgate gained 4%. The company is working on transaction to split in two by spinning off the studio, selling stakes to one or more minority investors. That deal has not helped Lionsgate stock of late — but nor has anything much helped any media shares, which have been smacked cross big names and small. Netflix is exception lately, seeing recent gains – from a low point earlier this year — as investors appear upbeat on the coming ad-supported tier. The stock gained 1.5% today.
Paramount Global is 3% higher. Warner Bros. Discovery, under a hot spotlight as it moves ahead as a merged company, gained 4%. Streaming strategy and costs, cord-cutting and consumer pocketbooks are front of mind ahead of earnings set to start later this month amid fears of recession.
Twitter was one stock that bucked today’s uptick, off 3%. The company had rallied on Friday on speculation that it might settle its lawsuit with Elon Musk before the case goes to trial in a few weeks. And shares of Musk’s Tesla shares sank 9% today on weaker than expected quarterly sales.
High and rising interest rates and record inflation fueled in part by the ongoing war in Europe have flattened stocks, and not been kind to bonds either — investments that would normally move in opposition. Meanwhile, strong dollar is crushing other currencies (making U.S. goods more expensive overseas). Revenue earned abroad by U.S. will take a hit when converted to dollars in the next batch of quarterly corporate earnings.
Today’s uptick may have been due in part to the U.K. Prime Minister Liz Truss backtracking on a sweeping tax cut for the wealthiest. The tax cuts, seen as undermining efforts by central banks globally to fight inflation, sent markets spiraling downward in recent days and many market analysts doubt the pain is over.
Stateside, the Federal Reserve has been hiking interest rates nearly monthly to dampen consumer demand. The Fed’s delicate dance is to do that without tipping the country into recession although comments by Fed chair Jerome Powell recently indicated he’ll continue to raise rates regardless until inflation subsides.
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