Media Stocks Jump With Broader Market As Interest Rate Relief Seems Certain

Media and entertainment shares are having a great day as are markets with the Dow, S&P and Russell 2000 all decisively on the upswing. Investors are baking in an interest rate cut this fall with some pushing for relief as early as the Federal Reserve’s July 31 meeting.

U.S. Adds 272,000 Jobs In May, Beating Expectations; Entertainment Industry Employment Largely Unchanged

Showbiz stock are gaining pretty much across the board. Disney and Paramount Global gained 2%, Warner Bros. Discovery is up nearly 7%. Stocks from Comcast to Fox to TKO, AMC Networks and AMC Entertainment are trading higher. Broadcasters are upbeat with Nexstar, Sinclair, Tegna and Gray popping.

One media analyst called the media gains a market rotation out of tech and into value and more interest-rate sensitive names.

The Dow Jones Industrial Index is up more than 700 points in afternoon trading,

Tech stocks, in fact, are mostly down. That perhaps is unfairly hitting Netflix, off a hair. Meta, Alphabet, Spotify and Snap are in the red.

The U.S. central bank hiked rates 11 times between March of 2022 and July of 2023 to punishing levels as it sought to tame a bout of post-Covid inflation driven by an overheated economy, a tight labor market and a bit of corporate price gouging. While it’s stopped raising rates it hasn’t lowered them yet either, saying it won’t until inflation – the change in how much things cost — starts running at or near the Fed’s target rate of about 2%.

U.S. Economy Added 303,000 Jobs In March; Losses Seen In Entertainment Employment

Good news came last week when CPI (Consumer Price Index) came in lower than anticipated, falling in June from May, the first monthly dip since May of 2020. It was up 3% year-on-year but that’s the slowest annual gain in prices since March of 2021.

The latest monthly labor market report showed the unemployment rate rose more than unexpected, hitting its highest level since November of 2021, a sign that the job market continues to cool. That’s not great for workers but the Fed has said it tries to strike a balance.

According to the website FedWatch, markets are pretty positive a cut will come in September if not already the Fed’s July meeting.

Fed Chair Jerome Powell said at an event yesterday that this recent data has added “somewhat” to its confidence that inflation is nearing its target but declined to specify a rate cut timeline.

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