Stay sober on stock market.

IT'S discouraging when an apparently isolated stock market stumble gets treated in the press as a Big Story.

That happened last Tuesday when the Dow Jones industrial average skidded 3.3 percent. It got top of Page 1 treatment in newspapers all across the fruited plain.

But the fact of the matter is, we won't know for a while whether the plunge had any meaning. If the markets keep going down, it'll have meaning, and it will deserve to get Big Story treatment. But if it turns out to be a one-day or one-week downturn in an otherwise ascending market, Tuesday's drop will have no real meaning. The fact is, stock markets go up and go down all the time.

But you might ask, don't big drops in the stock markets precede recessions? Well, yes. Recessions are preceded by stock drops. Trouble is, not every drop is a harbinger of recession. Remember the old saying? The stock market has predicted 10 of the last three recessions.

When a big stock drop occurs, the real challenge for journalists is to use some judgment to discern what caused the move. When the markets plunge,

reporters and editors should take a breath and ask whether it appears to be just a noisy jerk, or whether there's reasonable evidence that today's stock market drop could represent a true turn. Journalists had scant hard evidence last Tuesday that the downturn represented much at all. There was one sour economic report, sure, but that's just one report. Besides, such reports often are quietly revised later.

Journalists did have soft evidence. Alan Greenspan had opined earlier about the possibility of a recession later this year, and that added to the mood that the long-in-the-tooth economic expansion is about ready to contract.

What triggered Tuesday's market tumble was an 8.8 percent drop in the Chinese stock market. But as the Los Angeles Times pointed out in its second-day story, the markets there got scared by rumors, just rumors, that the government may act to slow the economy. In other words, some traders on the other side of the world thought they saw a ghost, but there was no evidence that the Chinese economy is fundamentally hurting.

The point is, none of this is enough to justify the Big Story treatment that Tuesday's stock plunge got.

Having labored in newspapers for more than a couple years, I have a sense of how these things play out in newsrooms. Markets can drop 1 percent or even 2 percent day after day, but that gets ignored by the senior editors, the ones who follow everything from sports to city hall and who decide what goes on Page 1. But when the markets drop 3 percent in one day, the editors suddenly declare it to be a story because it's dramatic. The business editor may point out that the drop could well be just a one-day spasm with little meaning, but the argument is lost. And if it' s a slow news day--if Britney hasn't shaved her head and if they can't run the big series on global warming because it has been such a cold winter--the 3 percent market drop becomes that day's Big Story by default.

That's discouraging because the markets should get sober coverage. Unless there's evidence that the economy is turning down, or unless the market downturn lingers and deepens, then a 3 percent downturn is no big deal.

Charles Crumpley is editor of the Business Journal. He can be reached at [e-mail].