Media stocks were not spared Monday as the stock market suffered a steep decline. U.S. stocks had their worst one-day drop since December 2008, Bloomberg reported, with the Dow Jones Industrial Average off 633 points on news of Standard & Poor’s downgrade of the nation’s credit rating.
Among the major media companies caught up in Wall Street’s bad day, CBS Corp. fell 10.31%, News Corp. dropped 7.65%, Viacom was down 7.12%, Sony took a 6.60% hit and Time Warner Inc. was off 5.83%. LIN TV was down a hefty 12.73%, with Sinclair Broadcasting off 9.77%.
The L.A. Times reported the Dow finished the day down 633.17 points, or 5.5%, closing at 10,811.44. The damage was even worse on the broader Standard & Poor’s 500 index, which was down 79.83 points, or 6.6%, at 1,119.55.
The Times reported: “Market experts said the Monday sell-off was sparked by the S&P announcement but was motivated more by growing concerns about the weakness of the global economy. ‘It’s really all about economics,’ said Mike Norman, the chief financial strategist at John Thomas Financial.”
The Times story added: “The concern about the U.S. credit rating was amplified when Standard & Poor’s announced Monday morning that it was also downgrading the debt of mortgage giants Fannie Mae and Freddie Mac, which rely on U.S. government guarantees. But traders said much of the pessimism Monday resulted from broader concerns about the economy. ‘I don’t think the S&P announcement is the lead director of the day — I just think it is the icing on the cake,’ said Jonathan Corpina, a trader on the New York Stock Exchange for Meridian Equity Partners.”
Markets have seen losses almost every day for the past two weeks and have fallen to lows not seen since September 2010.
Added Bloomberg: “On the first trading day after the S&P downgrade, investors retreated from riskier assets on concern the global economy will continue to slow. They poured money into haven assets such as Treasuries, gold, and the Swiss franc, while benchmark equity indexes for Europe, Australia, China and smaller U.S. companies extended losses to more than 20 percent from recent peaks, the level some investors consider a bear market.”