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A theory stating that the market suffers during intense news coverage of a major event because persons stay home and watch the coverage, rather than go out and buy goods and services. This is a controversial theory and little evidence documents it. However, its effect, if any, would likely impact services more negatively than goods. For example, watching a natural disaster on television may prevent one from going to the cinema and watching a film about a natural disaster. It will not, however, prevent one from buying groceries. More generally, the CNN effect refers to the idea that 24-hour cable news has given the public the impression, but not necessarily a correct one, that it is more engaged with current events.
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