Introduction:
Financial news is often difficult to segment, particularly if one lacks an understanding of how this information fits together. This document seeks to outline the general concepts, key terms, etc. and then looks at each of the major news sources to see how these programs commonly present such material. The hope is that while this doesn't provide a recipe as such, it does offer some insight into both the subject matter and the way in which these things are presented in various broadcasts and news sources. Most of the actual segmentation is still a judgement call, but this should give an idea of what concepts are related and why.
Key Terms:
Stocks - Stocks are marketable securities representing a residual interest in a corporation. They are also known as 'equities.' Over 50% of adult Americans own some shares of stock, either as a direct investment or (more commonly) through mutual funds, pension funds, and individual retirement accounts (IRA's). (That fact alone is what makes financial news of immediate relevance to the audience).
Bonds - Bonds are debt and are issued for a period of more than one year. The U.S. government, local governments, water districts, companies and many other types of institutions sell bonds. When someone talks of the bond market, they mean the market for all bonds: federal, municipal, and corporate. Treasury Bonds and Treasury Bills are often quoted separately.
AMEX - American Stock Exchange. AMEX merged with the NASDAQ in November of 1998. "AMEX" is also the corporate trademark of "American Express," and occasionally the company's name comes up in financial news.
NYSE - New York Stock Exchange. This is the "big board" stock exchange on Wall Street. Occasionally, stories also mention trading volume as well as trading level for this exchange.
Dow Jones - The Dow Jones indeces, of which the Dow Jones Industrial Average is commonly called "Dow Jones," is a statistical fiction of the average of top stocks in each sector. The stocks that compose the Dow Jones Industrial Average are known as "blue chip" stocks.
NASDAQ - National Association of Security/Securities Dealers Automated Quotations. Not all securities are marketed on the NYSE or AMEX. The NASDAQ serves to market another entire tier of stocks. Usually, our news sources quote the "Dow Jones" and the NASDAQ. The NASDAQ is quoted as a composite index.
Pink slips - Stocks which are not listed on an exchange or the NASDAQ may be traded by the clearinghouses. For historical reasons, this is called 'trading pink slips.' Mention of this is relatively rare, and usually refers to how a stock was traded before listing on the NASDAQ.
ADR - American Depositary Receipt. These are receipts issued by American banks for foreign shares held by the bank or its branch in the country of issue. Until recently, this is how most foreign firms traded their stock in the U.S. markets. Many still do.
FOREX - Foreign Exchange Markets (General term). Often, sources will quote the foreign exchange rates for British pounds, Japanese yen, German Deutschmarks, and presumably soon the Euro. While stories which quote multiple rates should be segmented as one story, there may be extended explanation of a surprising rise/fall of a particular currency. That can be segmented separately if it seems prudent.
Gold & Silver - Gold and silver, and occasionally platinum, are quoted either immediately before or immediately after foreign exchange reports. These are collectively called 'precious metals.'
Commodities - These include things like lumber, pork bellies, barrels of oil, etc. Commodities markets consist of the buying and selling of futures at 'spot' (current market) prices.
Until recently, stock (and commodity) and bond markets were counter- cyclical. There may occasionally be mention of how these markets may or may not be moving the same direction.
S&P's Index: Standard & Poors Indeces. Most of these are stock indeces, though the S&P has many others. The S&P 500 is the index of the 500 top performing stocks.
Mutual funds - These are funds where investors buy shares of an entire portfolio. The fund managers select the actual investments. They have widely different rates of return.
News of relevance to financial markets:
After discussing the performance of national and global markets, most news reports (particularly MSNBC) also discuss noteworthy events, market trends, and announcements from Washington which may influence the market as a whole.
Employment statistics, housing sales, sales of durable goods, inflation, business failure rates, loan default rates, mortgage lending rates, etc. are all announced according to a monthly calendar.
Usually, the news sources comment only on unexpected announcements, or when expected ones don't jive with expectations. These divergences tend to have noticeable effects on the market. These statistics are what the Federal Reserve Board uses to set monetary policy, including interest rates. All changes of interest rates unless anticipated will have some noteworthy effect on the markets.
In addition to a calendar of governmental statistics, all firms announce their earnings at predetermined intervals. Pre-releases of estimated earnings mean that the market usually knows what to expect. When actual earnings are different than projected earnings, the effect on share price is usually dramatic. Thus, the news sources may mention such information.
Mergers & Acquisitions are always of interest to investors, and often account for dramatic changes in share price of the stocks of the companies involved and their principal competitors. These stories generally stand on their own, even if they are linked thematically with stories preceding or following them. Stock splits are also of significant interest to investors, and occur when a firm exchanges stock at a certain rate (2-1, 3-2, etc) in order to bring down share price so that 100 or 1000 lot shares are more accessible to individual investors.
Lawsuits and settlements thereof also affect share price of various stocks. Again, even while themetically related, these are generally best segmented as independent stories. FDA approvals and bans are of a similar nature.
Reports of greater length often develop around trends or surprising developments vis-a-vis one of the above.
ABC - Their financial news section is called "On the Money." Usually has a brief mention of the Dow Jones industrial average at the close of trading, as well as the change (up/down) for the NASDAQ composite index. These should be segmented together. It often follows it with news about the markets themselves, then with business news (mergers, etc) that influence the prices of various stocks. Each news item should be segmented separately.
CNN - Mentions markets in passing, except when broadcast corresponds with market closure/opening. Usually, their coverage (in a program called "Dollars & Sense") concentrates instead on corporate news, including acquisitions, profits, layoffs, expansions, etc. and their effects on the markets.
VOA - There are usually two to three incidences in each broadcast. The first is a strict news report of the financial news. While not all broadcasts are the same, VOA does touch on many of the areas described above. Stories in these sections should be segmented separately by theme.
The second incidence is normally a brief mention, summarizing market trends (about half-way through the broadcast), which the commentators often use as a point of departure for discussing economic news in general. The broadcasters prefer to speak in terms of 'share prices' instead of 'stock prices.' This discusses international markets as well as domestic ones, but the recap of market finishes should be segmented as one story. The trickiest to segment are those where the commentators offer multiple explanations for changes stock market trends. Most examples should be segmented as one story.
In other instances, foreign exchange reports are used as a segue to news of trends in global markets. If this is brief, it should be included as part of the story, especially if it is introducing a recurring feature like the NASDAQ sponsored market report.
Often the broadcaster goes on to speak about key financial events, with more emphasis on governmental announcements than that of individual companies.
The final incidence is normally at the end of the broadcast. This time, they usually make an effort to give all the information pertaining to the closing of each market, and briefly summarize both economic and corporate stories which influenced the day's trading. Usually, this summary should be segmented together.
PRI - Half way through the broadcast there is usually a brief mention of the Dow Jones and the NASDAQ. This should be segmented as one story. Often this is followed by stories explaining major shifts in these markets. Each of these stories should be segmented separately, and are ordinarily fairly lengthy. Since PRI is a combination of NPR and BBC, occasionally emphasis is on the London markets instead.
MSNBC - This news source concentrates on financial news more heavily than the others. In fact, its primary audience is individual investors and others who work in the financial industry. It does cover major news stories of consequence globally, with special attention on Capitol Hill, but the target viewers are consuming the financial news. The format of the program, however, is looser. Some days it has two or three major feature stories, with a number of interviews and even debate among various experts. In these broadcasts, which often run over, financial news is often truncated and re-visited the next hour. Otherwise, it is presented in enough detail to see clear demarcations of stories around core events.
The guidelines above should give some sense of how this information can be best grouped; however, because MSNBC does on-site reporting, it may often be hard to distinguish a teaser from a story immediately following it. In general, marking it as one story may be prudent.
NBC - Much like ABC, except that it doesn't have a dedicated financial news section because of the MSNBC broadcast. Usually mentions national news, and then notes effect on the markets or otherwise introduces a brief summary of market activity.