Street’s wild ride leads to tension

Corporate chaos, bargain stox make for iffy market

NEW YORK — After a wild G-force ride Monday, Wall Street traders feel today will give definitive clues as to whether the market, and media stocks, have bottomed out or whether to brace for a new free fall.

The market waged a stunning recovery Monday after dropping to six-year lows on jitters over corporate accounting.

Scandal and corporate chaos at Vivendi Universal, WorldCom and Adelphia Communications have helped pull showbiz shares into the market maelstrom, which smashed the Dow Jones Industrial Average down by 440 points Monday.

But the index ended off a mere 45 points and the Nasdaq finished higher as bargain hunters shopped with a vengeance.

As pressure builds, Coca-Cola was the first big conglom to announce it will expense stock options. That measure, one of several being pushed in Washington, would hit the profit and loss statements of many companies, including AOL Time Warner, like a ton of bricks.

“It’s a complicated issue — one that Congress, the FASB and the SEC have wrestled with for years. We will continue to examine the issue carefully,” AOL TW said in a statement Monday.

Viacom rose 0.05% to $39.13, one of the few showbiz issues to end in positive territory, although almost all rebounded from lows for the day. AOL TW sank to $12.40 but closed at $13.07 — down 0.53%. Walt Disney fell 2.55% to $17.98 and News Corp. eased 0.83% to $22.61. Embattled Viv U fell 3.4% to $16.20.

Wall Streeters, while heartened, aren’t crying recovery yet.

Monday still marked the Dow’s sixth straight day of losses amid fears on terrorism, corporate shenanigans and upcoming quarterly earnings reports. But new data showed cash flowing into mutual funds again and investors switching to stocks from bonds.

“Someone out there thinks some of the earnings will be good,” said Barry Hyman, chief market strategist at Gotham’s Ehrenkranz, King & Nussbaum.

Earnings for the quarter ended in June have started flowing in this week, with big media congloms set to weigh in starting next week. AOL Time Warner will report on July 24 and Viacom and Sony the day after.

Showbiz investors will be looking for greater transparency in a sector that was hit first by an advertising recession and then tainted by meltdowns at cabler Adelphia and Viv U.

“People are terrified of debt, and cable is an industry built on debt,” Hyman said.

French stock market authorities are investigating Viv U, which narrowly escaped a dramatic cash crunch.

And many media companies tend to focus on ebitda — earnings before interest, taxes, depreciation and amortization — a measure of cash flow that’s come under fire as traditional measures like net income/loss swing back into favor.

“They’ve got to make the numbers believable,” said one Wall Streeter.

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