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By Matthew
Klein | Friday, March 26 In
Media Res. Today was a
great day for risk assets, with the S&P
500 index of large stocks surging 1.7% and the Russell
2000 index of small-cap stocks up 1.8%. Within
the S&P, a staggering 452 components were up for the day—the third time
this year that at least that many S&P 500 components have gone up in a
single day. Stocks in Australia, Canada, Europe, the U.K., Japan, China, Hong
Kong, and South Korea were all up, as were gold, silver, copper, oil. The
dollar and bond prices, meanwhile, were both down, reflecting the
diminished appeal of haven assets when investors are enthusiastic about
growth. There was
one big exception to today’s rally, however: legacy media companies
like Discovery, ViacomCBS, and Fox. Discovery
and Viacom were both down more than 27% today, with each stock having dropped
about 50% from the recent peaks. Fox was down by 6% today, and has lost 13%
since the peak in mid-March. The recent shakeout pulled down the S&P’s
communication services sector by 1.1% today. The other 10 sectors were up,
with technology, energy, materials, and real estate all up by 2.5%. Despite the
carnage, the three companies’ share prices are still up year-to-date by far
more than the broader S&P 500 index, with Discovery up 39%, ViacomCBS up
29%, and Fox up 25%. That compares with less than 6% for the S&P 500
as a whole. All three
companies had been hit hard by the pandemic and by consumers’ shift to
streaming platforms at the expense of legacy cable media. Just before the
announcement of the first successful vaccine trials in November, the three
companies were down about 30 to 40% from the beginning of 2020. Since then,
however, the stock prices of Discovery and ViacomCBS more than tripled, while
Fox shares rose just over 50%. Perhaps recognizing the unusual nature of the
market moment, ViacomCBS sold a
bunch of stock earlier in the week to finance its ambitions for
the Paramount+ streaming service. (I subscribed last year to watch Star
Trek: Picard and have since been enjoying the back
catalog of Cheers.) The main
economic news of the day was the Personal
Income and Outlays report for February from the Bureau
of Economic Analysis. While disposable
personal income was lower than in January, when the $600 checks were
disbursed, household incomes after taxes and transfers in February were still
much higher than in December. Exclude the
various pandemic relief programs, such as the Economic Impact Payments, the
enhancements to unemployment insurance, the forgivable Paycheck Protection
Program loans, and the forbearance on student debt, and underlying disposable
income in February was at its highest level ever. That’s thanks in large part
to the continued strength of the recovery in employment income, which
surpassed the pre-pandemic peak in January and continues to rise. Things
should get even better once more people are vaccinated and normalcy resumes. Watch our
weekly TV show on Fox Business Fridays at 10 p.m. or 11:30 p.m. ET; Saturdays
at 10 a.m. or 11:30 a.m.; or Sundays at 7 a.m., 10 a.m., or 11:30 a.m. This
week, see an interview with Dan Springer,
CEO of DocuSign. Plus, get
insights on the battle between Hollywood studios and movie theaters. |
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DJIA: +1.39% to 33,072.88 The Hot
Stock: Nucor +8.9% Best Sector:
Technology +2.5% |
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