The Dow Jones Industrial Average fell more than 500 points on Thursday, wiping out all of Wall Street's 2011 gains in the worst single-day sell-off since the 2008 financial crisis.
Cable and network news channels scrambled to cover the historic drop, with ABC, NBC and CBS breaking into their afternoon programming to air brief reports after the markets closed, and CNBC and Fox Business--which went commercial-free to cover the close--planning special primetime coverage.
Analysts attributed the plunge to investor fear about the U.S. economy stemming from the congressional debt deal, Europe's debt problems and troubling economic data--such as the Aug. 5 jobs report.
But how much of Thursday's slide can be attributed to the media--particularly cable news, which treated the market's fall-off as breaking news throughout the afternoon, potentially fueling fear among investors?
Not much, media and financial vets say.
"These investors are way too sophisticated," Charlie Gasparino, senior correspondent for the Fox Business network, told The Cutline. "The markets are pretty smart, investors are pretty smart. They can see through the bull----."
Dan Gross, economics editor at Yahoo! Finance, agreed.
"A huge chunk of volume--and hence momentum--is now driven by machines, computers and algorithmic trading," Gross said. "And the computers definitely aren't watching cable news."
"Market activity driven largely by professionals, who are watching their data screens and usually have CNBC on with the sound off," Gross said. "They're not listening to what the hosts are saying."
If they were, they'd be hearing noise.
"I turned on CNBC at one point to find no fewer than [eight] faces in little squares, like a panicky Brady Bunch," Heidi N. Moore, who covers Wall street for Marketplace radio, wrote on her Tumblr. "Their theories to explain the drop--and oh boy, were they theories--were innovative. It was hard to follow, but at least two contributors were making a compelling case that German bunds and Swiss francs had conspired with the Japanese yen to create a whisper of QE3 in the U.S. I wondered how Colonel Mustard had escaped suspicion, what with his candlestick in the library."
My theory: yesterday the Onion published a story with the headline "Drunk Bernanke Tells Bar Patrons How Screwed Up the American Economy Really Is." Obviously that's a "sell!sell!sell!" moment. It was hardly just CNBC. Other news outlets suggested that the problem was that investors had lost faith in policymakers to handle sovereign affairs. This was amusing. That's been going on for 3 years at least, people. The truth behind this blind-men-and-the-elephant farce is that people need to hear voices and theories to comfort themselves. And naturally, you can't have dead air or blank space when people want some insight into the markets freaking out.
Gasparino, who was live on the floor of the New York Stock Exchange, did concede that there may have been a "herd mentality" that contributed to the sell-off during the last few minutes of trading. "You don't want to be the last one out," he said.
"But here's what none of those people will tell you," Moore added. "They don't know."