Reporting intelligently about the financial markets has become increasingly important as more people have added stocks to their financial portfolios. Just 40 years ago less than 20% of U.S. households had some sort of stock ownership; now more than half do. While stocks are the most widely known financial product traded in the markets, others include bonds (debt, essentially), commodities and futures contracts, and currency.
As a result, covering the markets can be one of the most intense jobs in business journalism. Reporters often write stories before the market opens about what is expected to happen, file updates as the day unfolds, and complete the stories after the markets close.
When covering the markets, keep your reader, the investor, in mind. Bloomberg News, one of the largest business news organizations in the world, suggests that four questions should be answered:
- What happened in investments today?
- Why did it happen?
- How does today’s move compare with the past?
- Who said what about all of this?
After you discuss what happened and why, most readers are concerned with how today’s moves compare with the past. This means providing context, such as whether the day was the biggest advance or decline in the past week, the past month or the past day. You also want to examine the market trends: How many days in a row has the market risen or fallen, and has the market reached its highest or lowest level in a certain time period?
Too often reporters overplay or underplay a daily change in the stock market. Don’t use verbs such as “soared” or “jumped” for what is a small gain, or “routed” for what are really small losses. The following guidelines should be applied when using verbs to describe how a broad market index has fluctuated:
- 1 percent drop or less: Use “fell” or “dropped,” as well as “declined.” Even “moved downward” is acceptable.
- 2 to 4 percent decline: Any of the above, as well as “dipped” and “slumped,” which are slightly more serious grades of a fall.
- Rise of up to 1 percent: “Gained,” “increased” or “advanced” is fine here, as are “rose” and “grew.”
- 2 to 4 percent increase: Again, “gained,” “increased” or “advanced” is fine here, as are “rose” and “grew.”
One of the most difficult things about covering the markets is determining what caused the change from that day or week. Markets reporters interview a number of people involved in the market, from traders to economists to analysts, to assess why stocks rose or fell, but they’re just a handful of what’s likely thousands and thousands of people in the market that day or week. Be careful not to give too much weight to one theory or another about the market’s movement.
There are some basic reasons for the markets to move. For example, when the government releases data about the economy, such as unemployment or the gross domestic product, those numbers often influence what price investors are willing to pay. A large company such as Walmart or ExxonMobil reporting earnings that indicate that consumers are spending more, or less, than normal, that can also influence the direction of the market. Non-business factors such as wars or political unrest in certain parts of the country can also play a factor.
Include the performance of specific stocks in any market story, such as the big companies who moved the most during the day. Often the Dow Jones Industrial Average, a composite of 30 top stocks, will rise or fall during the day because of a big move by one of those stocks. That rarely happens with the Standard & Poor’s 500 Index, obviously, because it includes 500 stocks.
Finally, don’t forget that the markets are open 24 hours a day. When the American markets close (4 p.m. Eastern Standard Time), the markets in Asia have just opened, and when the Asian markets close, the markets in Europe are opening. And even when these markets are closed, the so-called after-hours market allows investors to buy and sell stocks and other investments.
When writing a stock market story, your goal is to provide a snapshot of what happened during a particular time period, pointing out trends and other specifics. But the market is constantly changing, and you can only do so much to cover what is a massive story.
And then it starts all over the next day.
Chris Roush is the Walter E. Hussman Sr. Distinguished Professor in business journalism at UNC-Chapel Hill. He can be reached at croush@email.unc.edu.
Tags: consumer affairs, economy, financial crisis, training.