Entertainment Stocks Post Modest Gains as Broader Market Rally Peters Out

Entertainment stocks mainly posted modest gains Friday, adding to Thursday’s surge, even as the broader stock market rally paused following a disappointing consumer confidence reading.

The Dow Jones Industrial Average and S&P 500 both dipped less than 1% in late morning trading after the indexes recorded their biggest one-day gains since 2020 on Thursday. The tech-heavy Nasdaq Composite hovered in positive territory.

Thursday’s rally followed news that inflation is easing, prompting hopes that the Federal Reserve will slow its interest rate hikes. The S&P 500 shot up 5.5%; the Dow gained 3.7%, or 1,200 points; and the Nasdaq soared 7.4%.

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Friday’s consumer confidence reading helped dampen the market’s enthusiasm.

The University of Michigan said consumer sentiment fell to 54.7, a drop of 8.7% from October and nearly 19% from a year ago. Economists were expecting a reading of 59.5, according to a Wall Street Journal poll.

The measure had improved since June, but gave up about half its gains since then last month, said Joanne Hsu, the survey director, in a statement, pointing to rising interest rates and continued high prices across Americans of all demographics.

“Instability in sentiment is likely to continue, a reflection of uncertainty over both global factors and the eventual outcomes of the election,” Hsu said. Consumers continue to expect inflation to rise about 5.1%, up from 5% last year, in the coming year.

Expectations for a recession remain high despite slow growth last quarter, but entertainment companies may feel some benefit from consumers seeking affordable forms of amusement as times get tougher.

“Compared to other out-of-home options consumers have to choose from, going to the movies remains a very affordable form of local entertainment,” Cinemark CEO Sean Gamble said during the company’s third-quarter conference call last week. “Furthermore, it provides an often needed escape from reality during challenged times.”

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Cinemark shares were flat in Friday trading, at $11.93. Rival AMC Entertainment, popular with day traders, gained 4.4% to $6.40, adding to its 18% leap Thursday. Imax Corp. added 3.8% to $14.23, after jumping 6% Thursday.

Shares of The Walt Disney Company added 2.7% following news that “Black Panther: Wakanda Forever” exceeded the original Marvel Studios release with a $25.2 million opening Thursday. Shares were trading at $92.90.

Paramount Global gained 2% to $19.84, building on its 6.7% gain Thursday. Warner Bros Discovery, which jumped nearly 10% Thursday, added another 4.6% Friday to $11.30. Sony Group was also up 2.6% to $82.61 after ending Thursday up 6.7%. Lionsgate Entertainment rose 2.6% to $6.60.

Streaming leader Netflix added 2.5% to $282.40, after an 8% gain the prior day. Amazon shares gained 2.5% to $99. Roku gained 3% to $57.16 and AMC Networks leaped nearly 7% to $20.60.

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