Worried about the stock market? The media may have something to do with that.
Photo by AP Images

Worried about the stock market? The media may have something to do with that.

February 6, 2018

The Raw Data

Unspun and unbiased. These are the facts.

Dow Jones closes down 4.6% in largest one-day point decline

On Monday, the Dow Jones Industrial Average declined 4.6 percent to 24,345.75 points. The 1,175-point decrease was the largest one-day point decline in the index’s history, and the largest in percentage terms since August 2011.

Read the full Raw Data here.

Distortion Highlights

  • Monday’s decline in the Dow Jones was significant — it was the largest one-day point decline in the index’s history.
  • But was the media’s added drama necessary?
  • See how the media’s distortions can affect not just our understanding of the news, but also market fluctuations themselves.

Show Me Everything

The Distortion

The Knife’s analysis of how news outlets distort information. (This section may contain opinion.)

Top Spin Words

  • Bloodletting

    Stocks were hit hard across the board with only technology surviving Monday’s bloodletting in the Dow. (The Washington Post)

  • Went off a cliff

    Stocks sank throughout the day, then went off a cliff in the final hour of trading. (CNN)

  • Whiplash inducing

    Monday’s whiplash inducing trading session has finally ended — and probably not a moment too soon for frazzled investors. (Financial Times)

  • Carnage

    Here’s a round-up of Monday’s carnage. (Financial Times)

  • Promised to raise fresh anxieties

    The downturn promised to raise fresh anxieties among Americans who’ve seen their retirement savings climb steadily higher over the past year. (The Washington Post)

  • Harkening back to the Grim

    But inflation worries abound, with some harkening back to the grim economics of the 1970s when inflation soared into double digits. (The Washington Post)

  • Mayhem

    The selling gathered steam on Friday when the Dow plunged 666 points, or 2.5%, at the time its worst day since the Brexit mayhem of June 2016. (CNN)

  • Lulled to sleep

    Still, for investors lulled to sleep by the steady upward climb since Election Day, it was alarming. (CNN)

  • Jitters

    The moves come after the indices clocked their biggest weekly loss in more than 2 years on Friday when data showing a sharp increase in wages sent jitters through US bond and equity markets and raised concerns that the Federal Reserve may be falling behind the curve on tightening. (Financial Times)

  • Spooked

    To keep that under control, America’s central bank will need to raise interest rates, which is what has spooked investors who were expecting the US Federal Reserve to increase rates only two or three times this year. (BBC)

  • Big skid

    Monday’s big skid — which was the largest intraday trading drop in Dow history — came on the heels of Friday’s 666-point Dow decline, the sixth-highest point drop in Dow history but only around 2.5 percent from its lofty highs. (The Washington Post)

  • Trouble

    The trouble in the market began early last week, when investors focused on a number of lingering concerns. (CNN)

    The spike signifies how calm Wall Street had been — and how unprepared the markets were for trouble. (CNN)

“It was the scariest day on Wall Street in years.” That’s how CNN, one of the four news outlets we analyzed, opened its article on Monday’s decline in the Dow Jones. Notice how CNN’s description creates a powerful impression while providing no data about what happened that day. That’s what spin can do.

By “spin,” we’re referring to language that’s dramatic, sensational, vague or subjective. While entertaining (if you like your news sensationalized, that is), spin can taint or bias the way we understand events and take in information. More importantly, it can affect the way we make decisions. And what drives the financial market? That’s right: investors’ decisions.

For instance, say you’re an investor. How would the following statements affect your decisions? (The spin is noted in red.)

Stocks sank throughout the day, then went off a cliff in the final hour of trading. (CNN)

Monday’s whiplash inducing trading session has finally ended — and probably not a moment too soon for frazzled investors. Here’s a round-up of Monday’s carnage. (Financial Times)

In the least, you might be worried about your investments, and you might consider selling. But notice again how these statements contain no precise, measurable data about the decline, yet they convey a big problem. This “lots of drama, little or no data” combination is a handicap for critical thinking and problem solving. The media’s spin could incite more fear, potentially making the decline greater.

We spoke with an institutional portfolio manager at a Los Angeles-based investment fund who said he thought the media has been embellishing the data in order to attract more readers and viewers. “The facts are the market gave back 10 percent of its gain over last two years,” he said of the recent declines. “That’s kind of boring, so the media will stoke a reaction.”

He also said the sensationalism tends to obscure the complexities of the market, and the fact that the economy is growing. “The stock market is the function of so many variables,” he said. “In general, it’s a function of corporate earnings, and whether they’re growing or shrinking. Right now they’re in a growth phase. The underlying numbers are good. The newspapers are ignoring how good the economy is.”

“The media does have a vested interest to spin the stock market in a highly negative way,” he added.

Here’s a word cloud of the most frequent and most dramatic language included in the outlets we analyzed. As you eye it, notice how the words affect your thoughts and emotions.

Even in statements that do provide specifics, spin can have similar effects. Here’s an example.

The Dow Jones industrial average plunged 1,175 points Monday in an exceptionally volatile day for financial markets across the globe, stirring concerns about the durability of the long-running bull market. (The Washington Post)

The Post’s lead statement provides actual data about the Dow Jones, but then adds spin. Compare that to the lead in our Raw Data:

On Monday, the Dow Jones Industrial Average declined 4.6 percent to 24,345.75 points. The 1,175-point decrease was the largest one-day point decline in the index’s history, and the largest in percentage terms since August 2011.

Ours may not be as emotionally gripping as the Post’s, but it is more informative. And that’s what data-based reporting can do. How would financial markets fare if the media reported just the facts?

Is it fact or fiction? Which outlet presents the most spin?

  • 22% Spun

  • 53% Spun

  • 56% Spun

  • 57% Spun

Fiction
or
Fact

The Washington Post

“But inflation worries abound, with some harkening back to the grim economics of the 1970s when inflation soared into double digits.”

Some people think inflation may rise to double digits, as it did in the 1970s.

The Washington Post

The drop in the Dow “threatened to deprive President Trump and the GOP of a favorite talking point at the nascent stages of the 2018 midterm campaign.”

Midterm elections will take place this year. President Trump and Republicans have spoken positively about the economy, employment and the stock market.

Financial Times

“Monday’s whiplash inducing trading session has finally ended — and probably not a moment too soon for frazzled investors.”

Monday’s trading session is over.

The Numbers

See how the articles rate in spin, slant and logic when held against objective standards.

View Technical Sheet >