Battered media stocks and major indexes rebounded on Monday, reversing course after opening in the red on the first trading day of the fourth quarter.
A correction, however brief, was in order. The Nasdaq and S&P 500 lost significant ground in the first three quarters of 2022 – their first losing streak since the 2008 financial crisis. The Dow hasn’t done so badly in this period since 2015. September was particularly brutal, with the Dow Jones Industrial Average, S&P 500 and technology-heavy Nasdaq falling 8%, 9.3% and 10% respectively. Tech stocks took quite a beating.
All three gained strongly today as the Dow closed up 765 points with advances across the board.
Dish is up 7% and Disney 3%. The two have just resolved a transportation dispute.
Lionsgate gained 4%. The company is working on a split operation by splitting the studio, selling shares to one or more minority investors. That deal hasn’t helped Lionsgate’s stocks lately — but neither has it helped much in media shares, which have been split between big and little names. Netflix has been an exception lately, posting recent gains — from a low point earlier this year — as investors seem optimistic about the next level ad-supported. The stock gained 1.5% today.
Paramount Global is 3% higher. Warner Bros. Discovery, in the spotlight as it moves forward as a merged company, gained 4%. Streaming strategy and costs, cord-cutting and consumer wallets are top of mind ahead of earnings that are expected to start later this month amid recession fears.
Twitter was one of the stocks that resisted today’s rise, down 3%. The company had rallied on Friday on speculation that it could settle its lawsuit with Elon Musk before the case goes to trial in a few weeks. And Musk’s Tesla shares fell 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 flattened equities and also did not support bonds – investments that would normally move in opposition. Meanwhile, a strong dollar crushes other currencies (making American goods more expensive overseas). Revenue earned overseas by the United States will take a hit when converted to dollars in the next batch of quarterly corporate earnings.
Today’s rise could be partly due to British Prime Minister Liz Truss backtracking on a sweeping tax cut for the wealthy. Tax cuts, seen as undermining efforts by central banks globally to fight inflation, have sent markets tumbling in recent days, and many market analysts doubt the pain is over.
In the United States, the Federal Reserve raised interest rates almost every month to dampen consumer demand. The Fed’s delicate dance is to do so without tipping the country into recession, although comments from Fed Chairman Jerome Powell recently indicated that he would continue to raise rates regardless until that inflation goes down.