Dow Bites Man
Everyone leads with yesterday's action on Wall St. Nobody calls it a
"crash." At USA Today , it's a "global stock market blowout." At the
Los
Angeles Times , it's a "sell-off." The Wall Street Journal goes with "correction." The New York Times
favors "plunge," the Washington Post , "waves of selling."
Despite the one-day loss of almost $700 billion in stock value and the
halting of trading, not once but twice, by tripped "circuit-breakers," the
papers make the non-crash case in their primary reporting. They all point out
that the 7.2 percent drop in the Dow was far less than the 22.6 percent drop in
1987, and not even among the top ten biggest one-day percentage losses. (It was
12th.) And that the Dow is still up over 11 percent for the year. The WP
produces a particularly interesting pro-calm nugget: It has the chairman of the
Chicago Mercantile Exchange saying that within a couple of hours after the Big
Board closed, nearly 80 percent of his market's traders had paid off what they
owed from the day's trades. This, notes the Post , is a sign that firms
are healthy enough to absorb their losses.
And the NYT observes that thus far the stock market has not seen the
explosive growth in volume that characterized the 1987 crash. (But, notes the
WP , there was one growth of volume compared to 1987--that of on-line
trading, which as a result yesterday provided poor to non-existent
execution.)
The WSJ quotes one brokerage house stock expert to the effect that
the Fed isn't tightening, interest rates aren't rising and there isn't a
recession in sight. The paper also quotes a second Wall Streeter saying, "There
is no sense of urgency like in 1987..It seemed far too quiet for a day with
almost 700 million shares traded and a Dow off 550 points." Then the
Journal tries to take the temperature of people off the Street, but in
doing so, demonstrates a bit of a tin ear about the typical investor, since the
paper immediately comes up with a West Hollywood hair stylist getting his
Mercedes Benz washed, and a New York psychotherapist who spent a session
calming a patient thinking about selling.
The WSJ says that the day's events show one thing above all else: "To
an extent never seen before, the world's stock markets are interconnected and
co-dependent. When one market quakes, others can tremble." Indeed, the papers
say another down Dow day is likely today based on poor Tuesday openings in the
Asian markets.
Despite the generally evenhanded reporting, there are still some hyper
graphic elements. Both USAT and the LAT run their headlines in
extremely bold type. And to boot, the LAT 's is a six-column banner. And
(as was pointed out to this column by Tim Ferguson of Forbes ) somebody
should tell the photo editors that those pictures of anguished-looking floor
traders that so often run with "sell-off" stories are a bit misleading. Those
traders aren't necessarily bummed out when markets go down big-time. They're
just tired. Unless they're carrying their own long positions, they make money
on their transactions either way.
