On Wednesday, as U.S. equities stormed higher in reaction to the inaction by Federal Reserve Chairman Jerome Powell, who decided to become more patient and prudent with interest rates, there was a group that lagged the averages. That was the communication services sector, which was dragged down by a weak earnings result from AT&T (T) .

Because AT&T is a large component of ETFs that also hold Comcast (CMCSA) , Disney (DIS) , and Viacom (VIAB) , the company's results dragged down those three names in sympathy. So what did AT&T say yesterday that rattled the group and brought down our portfolio names?

There were some general puts and takes to the quarter, but we think part of the declines were driven by the subscriber losses at DirectTV Now, the company's direct to consumer streaming service. The product is struggling to find consistency in its subscriber base, which makes sense given all the competition in this new and growing industry. To help make this business more durable for the future, AT&T eliminated promotions aimed for low-value, high churn customers to help form a solid base. Probably smart for the long-run, however this led to an increase in subscriber losses in the interim. And when investors see one company struggling with their streaming service launch, they will fear that of others (even though Disney's content reigns supreme; Viacom is a supplier of content; and Comcast is more of a connectivity business) Then there is always the fear that AT&T might not be able to meet its dividend obligations, which is an issue completely specific to the company.

Have we seen this type of ripple effect before? We did in fact the last time AT&T reported its earnings, which was on October 24. Full disclosure: the market plunged 3.09% on that day so everything was down, however, AT&T's weakness rippled through the companies in the communication sector and caused many to underperform. Comcast fell 4.29% to $34.12, VIAB dropped 8.53% to $29.92, and DIS stumbled 5.29% to $111.61. We said that day in our Alert here that AT&T's challenges were very specific to AT&T (again, weak OTT and linear subscriber trends due to competition and less promotions), and we said VIAB's decline was a buying opportunity (we backed that up with a trade Alert here .

Comcast is strongly bouncing back from yesterday's declines, just like it did after AT&T's previous earnings release. This is rightfully so because the company has put together a few strong quarters in a row (most recently here). AT&T's issues are not being felt by Comcast. We view Comcast as a buy on AT&T related weakness going forward.

Disney is rebounding well today too, though shares seem to be stuck in a range until its more is known about its Regional Sports Network divestiture as well as the timing of the Fox deal. Disney also reported a very strong quarter back in November (see our Alert here  . Again, AT&T's issues weren't an issue for Disney and we'll treat this stock as a buy on related weakness too.

Lastly, VIAB is trading back around that $29 level from October, but the stock is up nicely this year; more than 14% year to date. In addition to VIAB's general recovery from yesterday, the stock is trading higher today off a report by CNBC (see here ) that discussed how the CBS board might be more ambitious than just a merger with Viacom. To further increase scale, a second move could come through a tie up with Discovery (DISCA) . Essentially, a CBS (CBS) -Viacom merger would be step one of a larger plan that includes Discovery. Although this is just one report, a potential powerhouse combination of CBS-VIAB-DISCA would certainly not succumb to the same type of challenges that have plagued AT&T.