An unusually hefty though widely expected U.S. Federal Reserve rate cut Tuesday led to the biggest Wall Street rally in five years, but media stocks underperformed.
That media congloms didn’t move as dramatically as some other stocks wasn’t a surprise given that Tuesday’s rally was mostly driven by the financial sector.
“This rally reflects an easing of concern that we would have a financial crisis,” said Northlake Capital Management’s Steve Birenberg, who specializes in media investments.
“Media stocks are more sensitive to concerns about future economic growth,” Birenberg said. “Despite the big rally, those concerns remain and thus concerns about advertising growth remain. After all, the Fed statement today said the risk to growth was to the downside.”
If the federal government were devaluing the dollar to try to help out Disney or The New York Times Co., people would throw fits. But do it for Lehman Bros. and it’s prudent statesmanship?