The performance of stock markets often appears worse in the daily news than it actually is. This column argues that this negative news bias arises from two factors: (1) journalists tend to focus on major events, and (2) the daily performance of stock market indices is negatively skewed. It shows that about half of the negativity bias in news can be explained by the distribution of stock returns, even when the negative reporting bias is not explicitly present. Media consumers should be aware of the big news bias and look beyond the daily news cycle to stay informed.
The world often appears worse in the daily news than it actually is (Rosling et al. 2018) — and so does the performance of stocks. Consider Germany’s DAX stock index as reported on the country’s most-watched nightly news programme. Between 2017 and 2024, the DAX rose by more than four index points per trading day on average. However, the DAX dropped by more than ten points on days it was reported on the most-watched nightly news. We explain why.
Figure 1 illustrates the discrepancy between the actual DAX and the DAX as reported on Germany’s most-watched and highly trusted nightly news, the ZDF heute-journal. The blue line shows a 75% increase in the actual DAX index between 2017 and 2024. The orange line shows the drop in the reported DAX, which is composed of reported daily changes and an assumed change of zero on trading days without coverage. While the actual DAX rose at an annualised rate above 7%, the reported DAX dropped at an annualised rate of around 8% — halving its value between 2017 and 2024.
Figure 1 Actual DAX stock market index and media-reported DAX, 2017-2024
Notes: In blue, the actual DAX across all trading days. In orange, the DAX as reported in the ZDF nightly news live segment from Frankfurt (heute-journal Börsenbericht). The reported DAX is based on the actual DAX change on days it was covered and assumes no change on trading days without coverage. ZDF stands for Zweites Deutsches Fernsehen and is one of Germany’s two main public television channels. DAX stands for Deutscher Aktienindex. See Ciccone and Rusche (2025).
Other main stock indices also do worse when weighted by daily media coverage. Between 2017 and 2024, the main national stock market indices in the US and the five largest European economies all rose. However, the average daily performance of all six indices turns from positive to negative when weighted by daily media coverage, as illustrated in Figure 2.
Figure 2 Actual and media-report-weighted performance of six stock indices, 2017-2024
Notes: Average daily changes in index points. In blue, the actual average daily change (the numbers on top are annualised returns in percent). In orange, the average daily change weighted by daily media reports. The weighted change is obtained by (1) collecting the daily number of news stories mentioning each country’s index by the country’s top ten online media outlets via Factiva, (2) computing the number of daily reports relative to total reports between 2017 and 2024, (3) weighting daily changes of each stock market index using the number of daily reports relative to total reports. The indices are: DAX (DEU), Dow Jones (USA), IBEX 35 (ESP), CAC 40 (FRA), FTSE MIB (ITA), and FTSE 100 (UK). See Ciccone and Rusche (2025).
Why so negative?
A straightforward initial explanation for why stock market news tends to be negative is that journalists often prioritise negative events (e.g. Harcup and O’Neill 2001, 2017, Soroka 2006, Garz 2014). This general negativity bias in reporting may extend to stock market coverage.
In Ciccone and Rusche (2025), we propose a second straightforward explanation, which builds on two factors. First, journalists have a natural tendency to focus on major events, whether negative or positive. Second, the daily performance of stock market indices is negatively skewed (e.g. Acharya et al. 2011, Albuquerque 2012, Campbell and Hentschel 1992). In a negatively skewed distribution, large deviations from the most common outcome tend to be negative, while small deviations tend to be positive. Together, these factors give rise to a big news bias in stock market reporting that helps explain why news coverage tends to be negative. Intuitively, sizeable downturns in the stock market are more frequent than equally large upturns. As journalists prioritise major events, stock market performance in the news tends to look bad — even over periods where frequent small gains lead to an overall upward trend in the market.
The big news bias we document aligns with a broader hypothesis about media negativity in the bestseller Factfulness by Rosling et al. (2018). The authors hypothesise that the media’s focus on major events can lead to reporting that overlooks progress driven by frequent small improvements if the overall positive trend is occasionally interrupted by larger setbacks. To the best of our knowledge, we provide the first test of this hypothesis.
Decomposing negativity
Our main subject of analysis is Germany’s most-watched nightly news, the ZDF heute-journal. The broadcast typically features a live segment from the Frankfurt Stock Exchange, summarising the day’s most important economic news. On around 30% of trading days, this segment reports the daily performance of Germany’s DAX stock index. We analyse all 1,846 live segments aired between 2017 and 2024 and compare the average daily performance of the DAX on days when it was reported to its overall average daily performance.
The DAX rose at an annualised rate of 7% between 2017 and 2024 — an average gain of four points per trading day. Yet, on days the daily change was reported on the news, the DAX dropped by ten points on average. As a result, the reported DAX in Figure 1 dropped by nearly 50% between 2017 and 2024, while the actual DAX rose by 75%.
What explains why the average daily performance of the DAX on the nightly news was so much worse than the actual performance? To find out, we model the ZDF heute-journal’s reporting on the daily DAX performance. We allow for journalists to be more likely to report negative changes, larger changes, or both. The model closely matches the ZDF heute-journal’s DAX reporting and yields two key findings: (1) large DAX changes are more likely to be reported, and (2) large negative changes are more likely to be reported than positive changes of equal size.
We then use the model to investigate the size of the big news bias. To do so, we estimate a restricted version of our model that assumes increases and decreases in the DAX are reported with equal probability — effectively shutting off the negative reporting bias. The restricted model explains about half the total negativity bias in the nightly news. We show that this is because the distribution of stock returns — including those of the DAX — is characterised by negative skewness: large deviations from the most common outcome tend to be negative, while small deviations tend to be positive. This, in combination with the nightly news’ focus on large changes, results in negative news on stock market performance — even when the stock market trends upward because of frequent small gains. Using simulation analysis, we show that the big news bias extends to other stock market indices and also analyse how the bias varies with the skewness of the distribution of financial returns.
Concluding remarks
Unlike other forms of media bias, the big news bias does not stem from cognitive heuristics or a conscious decision to slant the news toward a particular perspective. While we do not study effects of negative reporting on perceptions and consumer behaviour, previous research has found effects of (fake) news on tourism, well-being, investment decisions, and various other variables (Assenza et al. 2024, Fetzer et al. 2020, Norton and De Neve 2014, Parham and Kaniel 2016, Le Ferrara and DellaVigna 2015). Another interesting question is to what extent our findings generalise to other settings. Ordoñez (2013) documents stronger changes in macroeconomic variables during recessions than recoveries. Rosling et al. (2018) hypothesise a similar pattern for several indicators of economic development.
Given the media’s natural tendency to focus on out-of-the-ordinary events, the big news bias in media reporting is difficult to avoid. Media outlets that aim to paint a more accurate picture should put events into longer-run perspectives — even if only briefly and by referring to other sources of information. Media consumers should be aware of the big news bias and that it affects even the most trusted media. To stay informed, consumers must look beyond the daily news cycle.
When it comes to stock market reporting, media outlets should re-examine their goals. If the objective is to inform investors, selectively reporting large daily movements may offer little value to active investors and could mislead potential investors about long-term returns. If stock market performance is used as a real-time or leading macroeconomic indicator, media outlets should recognise that its link to overall living standards is weak and that better alternatives are available.
Source: cepr.org
