I quantitatively measure the interactions between the media and the stock market
using daily content from a popularWall Street Journal column. I find that high media
pessimism predicts downward pressure on market prices followed by a reversion to
fundamentals, and unusually high or low pessimism predicts high market trading
volume. These and similar results are consistent with theoretical models of noise and
liquidity traders, and are inconsistent with theories of media content as a proxy for
new information about fundamental asset values, as a proxy for market volatility, or
as a sideshow with no relationship to asset markets.