Wall Street ended sharply lower on Thursday as weak earnings
reports from media companies stirred fears that more viewers are
ditching cable TV, dragging the sector to its worst two-day loss since
the financial crisis.
The selloff was compounded by nervousness ahead of key jobs data on Friday that could provide clues about the timing of the first Federal Reserve interest rate hike in almost a decade.
Viacom fell 14.22 per cent to its lowest in almost four years after reporting lower-than-expected quarterly revenue due to weakness in its cable TV business. Walt Disney was off 1.79 per cent and down for a second session after it lowered profit guidance for its cable networks unit on Tuesday.
The S&P 500 media index lost 2.12 per cent and notched its biggest two-day fall since November 2008, with Time Warner, Comcast and CBS all in the red and Twenty-First Century Fox down 6.4 per cent.
"All the media stocks are down and it seems people just want to get out of the sector at any cost and take any loss," CLSA analyst Vasily Karasyov said.
Viacom's results and Disney's warning put the spotlight on a trend of viewers shifting from cable TV to Internet-based services such as Netflix, which rose 2.21 per cent.
The Dow Jones industrial average fell 0.69 per cent to end at 17,419.75 and the S&P 500 lost 0.78 per cent to 2,083.56. The Nasdaq Composite dropped 1.62 per cent to 5,056.44, its biggest one-day tumble since early July.
Eight of the 10 major S&P sectors were lower, with the health index's 2.09 per cent fall leading the decliners. Allergan fell 5.1 per cent after the Irish drugmaker reported a second-quarter loss.
In other earnings-driven stock moves, Tesla fell 8.88 per cent and Keurig Green Mountain slumped as much as 29.75 per cent after reporting disappointing numbers.
Investors were also jittery ahead of the release of U.S. non-farm payroll numbers, which are expected to have risen by 223,000 in July, matching gains in June.
The Fed has said it will raise rates only when it sees a sustained recovery in the economy.
After the bell, Zynga fell 6 per cent after it posted a disappointing quarterly report.
With about three-quarters of the S&P 500 companies having reported, second-quarter earnings are estimated to have increased 1.6 per cent while revenues are projected to have fallen 3.4 per cent.
However, valuations look stretched. The S&P 500 is trading at a 25 per cent premium to its historical median price-to-sales ratio, Jack Ablin, chief investment officer at BMO Private Bank said in a note to clients.
In Thursday's session, declining issues outnumbered advancing ones on the NYSE by a rate of 1.47 to 1. On the Nasdaq, that rate was 2.46 to 1 favouring decliners.
The S&P 500 index posted 18 new 52-week highs and 44 new lows; the Nasdaq Composite saw 64 new highs and 169 new lows.
About 7.8 billion shares changed hands on all U.S. exchanges, well above an average 6.77 billion in the past five sessions, according to BATS Global Markets data.
The selloff was compounded by nervousness ahead of key jobs data on Friday that could provide clues about the timing of the first Federal Reserve interest rate hike in almost a decade.
Viacom fell 14.22 per cent to its lowest in almost four years after reporting lower-than-expected quarterly revenue due to weakness in its cable TV business. Walt Disney was off 1.79 per cent and down for a second session after it lowered profit guidance for its cable networks unit on Tuesday.
The S&P 500 media index lost 2.12 per cent and notched its biggest two-day fall since November 2008, with Time Warner, Comcast and CBS all in the red and Twenty-First Century Fox down 6.4 per cent.
"All the media stocks are down and it seems people just want to get out of the sector at any cost and take any loss," CLSA analyst Vasily Karasyov said.
Viacom's results and Disney's warning put the spotlight on a trend of viewers shifting from cable TV to Internet-based services such as Netflix, which rose 2.21 per cent.
The Dow Jones industrial average fell 0.69 per cent to end at 17,419.75 and the S&P 500 lost 0.78 per cent to 2,083.56. The Nasdaq Composite dropped 1.62 per cent to 5,056.44, its biggest one-day tumble since early July.
Eight of the 10 major S&P sectors were lower, with the health index's 2.09 per cent fall leading the decliners. Allergan fell 5.1 per cent after the Irish drugmaker reported a second-quarter loss.
In other earnings-driven stock moves, Tesla fell 8.88 per cent and Keurig Green Mountain slumped as much as 29.75 per cent after reporting disappointing numbers.
Investors were also jittery ahead of the release of U.S. non-farm payroll numbers, which are expected to have risen by 223,000 in July, matching gains in June.
The Fed has said it will raise rates only when it sees a sustained recovery in the economy.
After the bell, Zynga fell 6 per cent after it posted a disappointing quarterly report.
With about three-quarters of the S&P 500 companies having reported, second-quarter earnings are estimated to have increased 1.6 per cent while revenues are projected to have fallen 3.4 per cent.
However, valuations look stretched. The S&P 500 is trading at a 25 per cent premium to its historical median price-to-sales ratio, Jack Ablin, chief investment officer at BMO Private Bank said in a note to clients.
In Thursday's session, declining issues outnumbered advancing ones on the NYSE by a rate of 1.47 to 1. On the Nasdaq, that rate was 2.46 to 1 favouring decliners.
The S&P 500 index posted 18 new 52-week highs and 44 new lows; the Nasdaq Composite saw 64 new highs and 169 new lows.
About 7.8 billion shares changed hands on all U.S. exchanges, well above an average 6.77 billion in the past five sessions, according to BATS Global Markets data.
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