Stock Market Performance in the Media: Reporting Big News, Missing the Big Picture?

Antonio Ciccone () and Felix Rusche ()
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Antonio Ciccone: Univerity of Mannheim
Felix Rusche: Max Planck Institute for Behavioral Economics

No 395, ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany

Abstract: Despite rising stock markets in the United States and Europe from 2017 to 2024, we document that average daily stock market performance becomes negative when weighted by the amount of media coverage. We propose an explanation for this media negativity bias that does not rely on a bad-news bias in news selection. Instead, it rests on two observations: the media prioritize large market movements, positive or negative, and average daily stock market performance conditional on absolute changes above a threshold becomes negative as the threshold increases. We quantify the explanatory power of the proposed mechanism using data from Germany’s most-watched nightly news, which reports on the country's main stock index in a standardized format. Our analysis shows that selective reporting of large market movements accounts for about half the gap in average daily stock market performance between days with and without news coverage. We explain and quantify the link between media negativity bias and the negative skewness of aggregate stock returns.

Keywords: Media Negativity; Financial Markets; Financial Journalism (search for similar items in EconPapers)
JEL-codes: G10 L82 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2026-03
New Economics Papers: this item is included in nep-fmk
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Persistent link: https://EconPapers.repec.org/RePEc:ajk:ajkdps:395

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