NEW YORK -- Entertainment stocks headed lower Friday amid a broader market selloff as Fed chief Alan Greenspan spooked investors by signaling that interest rate hikes are on the way.
The Dow Jones Industrial Average plunged 295 points, or 2.8%, to close at 10,219; the Nasdaq dipped 127 points. The Walt Disney Co., the only showbiz company featured in the 30-stock DJIA index, was off 2.7% at $37.50.
Greenspan told Congress on Thursday that the red-hot U.S. economy needs to cool off and indicated that the Federal Reserve is willing to boost interest rates as many times as needed to turn down the temperature of the stock market and put a damper on consumer spending. His comments had market strategists predicting multiple rate hikes and investors bailing.
Higher interest rates make it more expensive for corporations to borrow and grow and they also encourage the flow of funds from stocks to bonds.
Bewitched
Wall Streeters said the onset of a long holiday weekend also encouraged selling, as did a day of so-called double-witching, the simultaneous expiration of stock and index options.
Financial markets were closed on Monday for Presidents Day.
Financial and tech stocks were among the hardest hit, with entertainment issues down more or less in line with the market. News Corp. eased 2.4% to close at $56.75. Viacom dipped 2.1% to $54.81, Time Warner fell 1.5% to $76.06 and MGM slipped 2.5% to $21.94. USA Networks fell sharply by 6.1% to close at $45.19.
There were some exceptions. Seagram held its own, ending the session unchanged at $58.25, and Sony Corp. bucked the downtrend, rising 2.1% to $267.38.
Granite rolls up
Granite Broadcasting surged nearly 14% to $8.25 after falling like a rock early this week on news of a costly affiliation deal with NBC in San Francisco. Young Broadcasting, whose newly acquired San Francisco station KRON will lose the NBC affiliation to Granite, also saw its stock crash this week to rise Friday amid the overall market carnage. Young gained 3% to close at $25.63.
Paxson Communications advanced 3.3% to $11.69.
Shares in cable companies, which tend to be heavily indebted and therefore more exposed to higher interest rates, felt the pain. Comcast lost a heavy 8.3% to close at $39.50. Adelphia fell 4.5%, AT&T 4% and Charter Communications 3.2%.
Contact Jill Goldsmith at
jill.goldsmith@variety.com