Market Falls At Open Despite New Fed Move As Media Stocks Hit With Downgrades
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The stock market opened lower despite a aggressive move by the Federal Reserve, in an emergency meeting early Monday – it’s third since the crisis started – to combat the economic impact of the coronavirus pandemic. Media stocks from Disney and Lionsgate to WarnerMedia parent AT&T were hit with downgrades on worries about advertising, theme parks and a possibly more rocky than expected launch for HBO Max.
It was the first day of trading electronically only with the physical floor of the New York Stock Exchange closed to trading after cases of the virus. Disney was down 3%, AT&T down 6% and Liongsate off 3% after a morning note by analysts at Cowen.
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Netflix was up 4%, one of the only showbiz stocks in the green Monday morning, on an upgrade by Baird.
The DJIA was trading down 430 points or 2.2%.
Late last week economists issued grim predictions for economic growth and analysts have slashed earnings estimates for companies across sectors, including this raft for the entertainment industry on Monday morning.
The Fed expanded the scope of its asset purchases under its quantitative easing program and announced four new measures to grease the commercial paper, corporate bond, and even ETF markets.
The Fed also committed to the “establishment of a Main Street Business Lending Program to support lending to eligible small-and-medium sized businesses,” similar to programs from the Small Business Administration.
“While great uncertainty remains, it has become clear that our economy will face severe disruptions,” The Fed said in a statement Monday morning. “Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate.”
The Fed previously announced quantitative easing to buy at least $500 billion in U.S. Treasuries and $200 billion in agency-backed mortgage-backed securities over coming months. On Monday, it threw the numbers out the window and said it would purchase securities “in the amounts needed” through the end of September.
The U.S. central bank had already slashed interest rates to zero.
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