What’s the difference between a stock market “collapse” and a “correction?” It all depends on which news outlet you watch.
Over at the February 27 CBS “Evening News,” exaggeration was the rule of the day. Anchor Katie Couric called the drop “the ouch heard across the country.” Business reporter Anthony Mason used every strong word he could find to describe the decline of about 3 percent, from “breathtaking” to “disastrous.”
Then buried in his report, Mason tried to tell viewers that the economy is actually still doing well. “But overall, the economy remains healthy, says John Hancock's Bill Cheney,” Mason said. Cheney then commented that the bad news isn’t that bad. “The housing market seems close to bottoming out. Consumers just keep spending, regardless. And while it's always possible that we could end up with a recession, it seems to me the odds are reasonably low.”
But Couric wasn’t done. After Mason’s report, she compared the day’s drop to far worse performances, as if they were somehow similar. “To put today's 400-point, 3-percent drop in perspective, it was not the biggest of all time.” Using a chart, Couric then showed the biggest point drop happened Sept. 17, 2001, “when the Dow fell nearly 700 points, or about 7 percent.”
Her other example was the market’s biggest percentage loss ever on Oct. 19, 1987, “when the Dow lost more than 500 points. That worked out to a decline of more than 22 percent.” Couric still wasn’t done and finished up this downbeat comparison by telling viewers that the price of gasoline is “on the rise.” “It’s up more than 20 cents in the past four weeks to a nationwide average, $2.38 a gallon, the highest price in five months,” she said.
The New York Times gave a similarly bleak assessment, saying “Wall St. Tumble Adds To Worries About Economies” in its main front-page headline. The Times used comments by former Fed Chairman Alan Greenspan warning of a recession “later this year.”
However, reporters Floyd Norris and Jeremy W. Peters also warned of “worries that a decline in the housing market, and problems in particular with loans to risky borrowers, could spill over.”
Such gloom and doom didn’t infect all of the media. ABC’s February 28 “Good Morning America” had reporter Betsy Stark mixing her downbeat metaphors. “The nightmare on Wall Street began as a nose dive in Shanghai.”
But soon, anchor Diane Sawyer was looking for more knowledgeable help. “Our version of calling 911 is to bring in, from Ariel Capital Management, Mellody Hobson,” said Sawyer.
Sawyer continued her own negative outlook, talking about “the bottom simply dropping out, the market dropping off the face of the earth.” Then Hobson intervened, explaining that part of the decline was the result of a big mid-day drop because of backed-up orders. “It was really just a technical glitch. It was an expensive three minutes,” Hobson explained.
She went even further, showing how the market had been doing well since last year. “The last seven months, the stock market has been straight up. It's really unprecedented that we’ve seen this kind of straight-up run. In many ways, the volatility is normal and we haven't had it and it's come back,” Hobson added.
The February 27 “NBC Nightly News” also turned to the experts. The network brought in CNBC star reporter Maria Bartiromo, who explained “three factors” for the decline. Bartiromo said a sell-off in the Shanghai Composite Index, lower durable goods sales and world tension were all to blame for the drop.
“Mad Money” host Jim Cramer followed and called the drop a “buy, not a sell here.”