Evergrande Uproots Market's Optimistic Streak 📉 | News Sentiment Roundup 9/20-9/24

Stock market news trends pessimistically for the first time in over a month as China borders an impending real estate crisis. We dive into sentiment for $MSI, $CLOV, $BA, and $PH

Good morning ladies and gentlemen, welcome to another weekly edition of my stock market news sentiment review. I am your host Ramsey Shaffer (@ramsey_stocks on Twitter), thank you for being here.

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This past week we analyzed another 2,356 stock market news articles from across the internet and summarized the results of our analysis into this 5-minute report to help you gauge the aggregate mood about stocks and the market overall. A breakdown of how this report is written:

  1. This Week’s News Sentiment

  2. Most Mentioned Tickers

  3. Best and Worst Ticker Sentiment

  4. Market Mood Outlook

1. This Week’s News Sentiment 📰

Stock market news sentiment took a dive off the deep end this week after a good two months of consistently high optimism. The average stock market news article published this week recorded a 0.13 sentiment score (on a scale from -1.0 being most pessimistic to +1.0 being most optimistic). While the average sentiment is still hovering above neutral overall, this is the lowest score we’ve seen in over two months, signaling a large increase in pessimism expressed about the markets. In terms of time-sense expressed, we also saw high degrees of speculation recorded across news articles, with an average score of 0.70 (on a scale from -1.0 being completely past-tense and +1.0 being completely future tense). Putting two and two together, you could say this was our first bearish week of news sentiment in quite some time. Here’s a look at the major news events driving conversation sentiment this past week:

🦅 Economy: the major headlines event internationally this week was the potential default and collapse of China’s second-largest property development company, Evergrande. The company announced that it’s running out of cash last week and that bankruptcy could be imminent. These worries — coupled with persisting COVID-19 concerns — spurred an international sell-off across stock and crypto markets as investors around the world speculate about what the implications of an Evergrande crash could be for the greater Chinese (and world) economies. Domestically, U.S. politics loomed large in the financial markets as a potential source of volatility as Congress remains at odds over raising the federal borrowing limit.

📈 Stocks: as a result of the choppy national and international news, U.S. stocks road a bumpy path throughout the week, showing some of the highest volatility we’ve seen recently; on Monday the $VIX short-term stock market volatility index jumped to its highest intraday level in more than four months. The greater stock indexes remain poised to break their streak of monthly gains in September, though the S&P 500 recovered to post a positive result for the first time in three weeks, and the Dow and NASDAQ also posted small gains near 0.5% throughout the trading period.

2. Most Mentioned Tickers 📊

Each week we analyze the number of headlines written about each stock and cryptocurrency. The most mentioned tickers in this week’s news and the tickers with the biggest volume increase compared to last week are shown below:

🛒 Costco Wholesale Corp. ($COST) shows great earnings, and supply shortages: The stock with the biggest increase in news headlines this week compared to last was Costco ($COST). Costco’s rise in coverage this week came after the membership warehouse chain posted its Q4 earnings report on Thursday after hours. The company beat analyst expectations across the board, posting adjusted earnings per share of $3.90 (+7% YoY) and revenues — including membership fees — of $62.675 billion (+17% YoY). As a result of the positive earnings, $COST stock finished the week up 2.43% to $467.75 per share.

The good news coming out of earnings: Costco’s “incredible surge” of customer visits in recent months is a great sign, indicating it has held onto the customers it drew last year during the height of coronavirus lockdown. The bad news out of earnings: Costco also announced that they will be limiting their supply of items like toilet paper and paper towels in the coming weeks due to delays and shortages within its global supply chain.

How bad are the logistical issues? Apparently the company has resorted to renting out its own container ships to quell demand for certain high-frequency items. These delays aren’t unique to Costco — retailers around the world are experiencing similar supply issues as mounting inflationary pressure shake up production heading into the holiday season.

Costco Wholesale, IBD Stock Of The Day, Flashes Multiple Buy Signals After Earnings Beat” | Investors Business Daily

3. Sentiment Winners and Losers 👍👎

Each week we summarize the most extreme sentiment scores in the news for each ticker to help you decide where to focus your attention. Here’s a look at which tickers scored the highest (and lowest) in terms of optimism, pessimism, speculation, and reaction expressed in this past week’s news:

Sentiment: Most Optimistic😀 and Pessimistic😒 Tickers

💾 Motorola Solutions Inc. ($MSI) goes ex-dividend, has a great ROCE: this week’s most optimistic ticker in news coverage was Motorola Solutions ($MSI). $MSI finished the week up 2.67% to $240.77 per share on moderate trading volume; the stock is now up 43.7% so far this year. The company — which spun off from Motorola Inc. in 2011 — is data/telecommunications equipment provider, known for its video security and land mobile radio devices. The company recently introduced the first AI-enabled in-car video system for law enforcement.

Outside of its new product development, $MSI made optimistic headlines this week after going ex-dividend on September 14th. While this may sound a bit counterintuitive at first (why would a company make positive headlines for ceasing to give its stakeholder dividends?), most analysts appear to agree that the decision is actually quite positive for Motorola Solutions on the balance sheet, as its previous dividend payment rate was growing unsustainable for the company long-term.

Speaking of financials, other optimistic articles about $MSI this week include this one from Simply Wall St., highlighting the company’s exceptional return on capital employed (ROCE) of 22% over the past 5 years, a sign that Motorola Solutions has been and will continue to be a compounding machine into the future. This week’s most optimistic $MSI article:

Should You Hold Motorola Solutions Inc (MSI) Stock Tuesday? Yes.” InvestorsObserver

💊 Clover Health Investments Corp. ($CLOV) stock slips amidst dilution: this week’s most pessimistic ticker in news coverage was Clover Health. $CLOV stock finished the week down -3.07% to $7.73 per share as investors pulled money out of “meme” stocks amid the global turnover from the Evergrande financial crisis in China. As Jim Cramer likes to say, whenever there’s an influx of money into/out of the markets, the short-term swing plays are generally the first to show it.

Since January, $CLOV has been about as meme-stock as it gets, propped up by retail investors on Twitter and r/WallStreetBets with hopes that the fringe health insurance provider may be a technological source of disruption within the stagnant industry. As a result, the stock sees some of the most volatility on the market, and a high degree of short interest.

Outside of the pullback in stock price this week, much of the news coverage pessimism about Clover Health came regarding its increasing share dilution. The summary, (which came here from Seeking Alpha) is that $CLOV has been growing, and as a result increasing its expenses and losses in recent months ($317 loss this quarter). These expenses are being paid using shares, which has caused a 76% dilution. This week’s most pessimistic $CLOV article:

“Clover Health Stock Isn’t the Insurance Disrputing Play You Might Have Thought” InvestorPlace

Time-Sense: Most Speculative🤔⏩ and Reactive😮⏮️ Tickers

✈️ Boeing Co. ($BA) sees new order interest, but the road back remains long: this week’s most speculative stock in news coverage was Boeing. $BA finished the week up 4.68% to $221.39, and has now rebounded 33% since the depressed state it was in this time a year ago. Boeing’s trading pattern recently has been cause for relatively polarizing coverage in the news — while some analysts say $BA’s stock is ripe for a bullish rip, others are calling it a “value trap” as the stock has trailed the Dow over the past month. No one knows where to peg Boeing, making it one of the more speculative stocks on our radar in recent memory.

The bright side: Boeing is currently in conversations with Delta Air Lines about making the 737 MAX a part of the company’s commercial fleet. For those of you who have forgotten, the 737 MAX was grounded for roughly 20 months following a series of fatal crashes involving its faulty autopilot system, after which new order activity for the plane all but dried up. Thus, any commercial interest in the purchase of new 737’s is a big step for Boeing — an airliner like Delta making some big 737 purchases is the vote of confidence Boeing needs to get back on track.

The dimmer side: other analysts are still quelling their Boeing excitement, citing the ongoing COVID-19 and Chinese economic uncertainty as reasons for pause. Boeing’s bottom line is more-or-less a direct function of consumer flight volume, so as long as the international pandemic persists, Boeing will likely remain strapped for new orders. Throw on top of that the uncertainty of China’s current financial crisis, and it becomes hard to imagine anyone buying planes right now. I guess the future remains untold. This week’s most speculative $BA article:

“Boeing Stock Still Has Too Many Problems For This Analyst” Barron’s

🔭 Parker-Hannifin Co. ($PH) makes a big acquisition and sees PT revisions: this week’s most reactive ticker in stock market news coverage was motion and control technologies manufacturer Parker-Hannifin. $PH posted a slight increase of 2.44% to $287.84 in share price over the past week. The stock has tiptoed its way to a 44% gain in price over the past year. Parker-Hannifin is a major global producer of sensor and flow control systems for aerospace and industrial clients, competing directly against the likes of United Technologies and Bosch Rexroth.

Much of the reactive sentiment expressed about $PH this week came after the company received the go-ahead Wednesday from shareholders to buy composites specialist Meggitt PLC in an all-cash $8.75B acquisition. The move spurred an array of revised estimates and outlooks released about the company in the following days. Analysts at KeyCorp and BMO Capital Markets boosted their price targets on $PH to $375. MarketBeat also released this week that its analysts expect Parker-Hannifin to announce quarterly sales of $3.67B in the coming weeks — a 13.6% YoY growth compared to its $3.23B sales last Fall. This week’s most reactive $PH article:

“Parker Hannifin Buying Composites Specialist Meggist in $87B Deal”  Plastics News

Biggest Mood Swings and Changes 🎭🔀

Each week we compare the sentiment of each ticker to its sentiment from the previous week. Presented below are the tickers that saw the biggest change in each of our four sentiment metrics this week compared to last.

🧾 Intuit Inc. ($INTU) saw the largest increase in optimism expressed this week compared to last week after increasing in price by 4.7% to $577.92 on its gigantic purchase of email powerhouse Mailchimp. The acquisition came in at around $12B in stock and cash, and will pair nicely with the company’s existing QuickBooks, Mint, and TurboTax operations to position itself as the one-stop-shop for all small-business operational needs.

🔗 XRP Coin ($XRP) recorded the largest increase in pessimism expressed this week after falling 8.79% throughout the period on lackluster action from the greater crypto community. XRP — which is owned by Ripple Labs and is often referred to as “Ripple”, even though both are technically separate entities — has been the recent subject of an SEC lawsuit. The pessimistic sentiment comes as the company states it has “no plans” to settle with the SEC any time soon, confident Gensler will drop his lawsuit.

💸 Paypal Inc. ($PYPL) posted the biggest increase in speculative language expressed this week compared to last. $PYPL rose 2.42% on the week to $278.11 on headlines announcing that its app will be undergoing a complete redesign in the coming weeks, including the addition of a new savings account feature. Analysts say that the move makes Paypal even more attractive, and given the recent sell-off across the markets, now could prove to be a great time to add it to your portfolio.

👨‍✈️ Delta Air Lines ($DAL) received the second-biggest increase in reactive language expressed this week compared to last week (next to Parker-Hannifin Co. $PH). $DAL stock rose an exceptional 7.35% to $43.53 last week on the news that it’s contemplating buying some 737 MAX’s from Boeing. The most reactive headlines from Delta this week were from the company itself, calling for airliners to share their no-fly lists across carriers to keep “crap passengers out of the skies”. Delta has been a very perplexing stock to watch as of late, check out the deep-dive we did into the company last week here:

$DAL Sentiment Spotlight

4. Market Mood Outlook 🌡️🔭

Stocks saw some of their highest intraday volatility in months this week on the backs of high-uncertainty events, both domestically and abroad. With the U.S. government remaining deadlocked as to next steps for curbing the national debt and inflation, and China’s second-largest property developer on the verge of collapse, sentiment expressed in news coverage this week took a warranted turn towards the pessimistic side. Speculation also increased for a fifth consecutive week, signaling growing uncertainty about what to expect next from the markets.

As we wrap up the month of September this week, we expect it may be likely for us to break our streak of 7 consecutive months of increased S&P 500 growth. We will look to more news out of China as to their handling of the Evergrande fiasco for clues about the trajectory of the international stock and cryptocurrency markets. Lastly, there will be no planned weekly roundup next week as our back-end code base will be down for some scheduled maintenance — stay tuned later this week instead for some summary of what we’ve seen in September and what we’re reading. That’s all for today’s report; good luck this week everyone, and thanks for reading. 🙏

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When you sign-up, you’ll gain real-time market sentiment for thousands of stocks, top-tier sentiment metrics created by us, and news from accredited sources without bots or algorithmically written articles. The early access pricing will be ~50% less than what we’ll charge once we go live, since we think it’s important to reward the people like yourself who’ve been with us on this journey so far. Thanks for being here with us! Here’s a sneak peek: 👀