Good Earnings + Crypto Rebound + More Jobs = Happy News📈😊 | News Sentiment Roundup 8/2-8/6
Market optimism increases for the 4th consecutive week as earnings continue exceeding expectations. We dive into sentiment for Paycom ($PAYC), Centene ($CNC), Ingersoll Rand ($IR) & Activision ($ATVI)
Hi everyone, welcome to another weekly review of stock market sentiment. I am your host Ramsey Shaffer (@ramsey_stocks on Twitter), thank you for being here. Subscribe below to stay up to date on all stock market news and sentiment. If you like what you see, tell a friend! Reply or comment with any feedback or questions. 😊
This past week we analyzed another record 5,182 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:
This Week’s News Sentiment
Most Mentioned Tickers
Best and Worst Ticker Sentiment
Market Mood Outlook
1. This Week’s News Sentiment 📰
The trend of good vibes continued in this week’s stock market news, with the average optimism expressed per article increasing 8% to a quarterly high of 25% overall, and average speculation expressed increasing 80% (!!) to 51% overall. By these measures, this means that roughly 1 in 4 sentences written about the stock market this week leaned optimistically, and more than half of the sentences written about the markets this week were speculative in nature. To put it simply: stock market conversation is both significantly optimistic and speculative, signaling highly bullish sentiment. This is now the 4th consecutive week of increased optimism in market news. Some major factors and events driving bullish conversation this week:
📈 Stocks: Much of the bullish conversation this week can be attributed to the incredible run of second-quarter earnings reports we have seen so far. By the numbers, a staggering 87% of the S&P 500 companies that have reported Q2 earnings results have exceeded analyst expectations; the highest “beat rate” recorded since FactSet started tracking that data in 2008.1 As a result of this week’s impressive earnings, the S&P 500 and DOW market indexes both rose by more than 1%, back above their respective all-time high’s.
₿ Cryptos: Outside of stocks, news sentiment optimism this week was also driven by a boom in cryptocurrency prices, as Bitcoin ($BTC) and Ethereum ($ETH) have both climbed back above their $40K and $3K price levels, increasing 6% and 14% throughout the week, respectively. The global cryptocurrency market has grown more than 13% as a whole over the past 7 days.
🦅 Economy: Lastly, this week’s economic news was underscored by Biden’s sweeping $1T infrastructure plan being passed in the Senate, and July’s monthly employment report released Friday. The report highlighted more than 943,000 new jobs added in July — the largest monthly gain in nearly a year — as the national unemployment rate fell to 5.4%
2. Most Mentioned Tickers 📊
Each week we analyze the number of headlines written about each stock and cryptocurrency. The most mentioned tickers in this week’s news and the tickers with the biggest volume increase compared to last week are shown below:
📊 Facebook ($FB) made more headlines this week than any other stock as the dust settled following its second-quarter earnings report released last week. Despite posting top- and bottom-line earnings beats and recording robust growth in a variety of areas, analysts at SeekingAlpha advise caution and suggest its share valuation has fallen 6%, highlighting increased governmental scrutiny including antitrust risks. Other analysts at InvestorsPlace say the company’s huge free cash flows could make it a $500 stock (currently trading at $366) in the near future. Facebook is a mainstay of the top-10 most mentioned list, and has now made the list in 9 consecutive weeks.
🏰 Disney ($DIS) posted the biggest increase in article volume this week compared to last. The majority of Disney headlines published this week have come over the past 48 hours in anticipation of its Q2 earnings report to be released on Thursday. The entertainment giant has recently announced plans to continue updating its international theme parks throughout the pandemic, and though analysts expect deflated revenue from their parks division, Disney+ streaming is expected to bolster revenues. Remind yourself that Disney’s parks accounted for nearly 40% of the company’s revenues prior to the pandemic, so any increase in park attendance in the coming month is expected to reflect handsomely in $DIS’s stock price.
3. Sentiment Winners and Losers 👍👎
Each week we summarize the most extreme sentiment scores in the news for each ticker to help you decide where to focus your attention. By our analysis, here’s a look at which tickers scored the highest (and lowest) in terms of optimism, pessimism, speculation, and reaction expressed in last week’s news:
Sentiment: Most Optimistic😀 and Pessimistic😒 Tickers
🗄️ Paycom Software Inc. ($PAYC): This week’s most optimistic stock in news coverage was Paycom (optimism score: 56.1%). $PAYC’s stock price jumped 16.17% this week to finish Friday at $466.45 per share after the company reported positive second-quarter earnings on Wednesday. Paycom — a SaaS provider of payroll and human resource management systems — saw far and away the most optimism expressed in articles this week compared to competitors like Workday and ADP, driven primarily by analyst conversation. One key driver was Barclays’ revision of their $PAYC price target to $500 following the company’s earnings of $0.97 cents per share in Q2 (more than double consensus estimates of $0.47 per share). This week’s most optimistic Paycom news article in terms of sentiment expressed:
“Why Paycom Software Stock Was Soaring This Week” | The Motley Fool
⚕️ Centene Corp. ($CNC): This week’s most pessimistic stock in news coverage was Centene (pessimism score: 32.3%). The company is a major intermediary of government-sponsored and privately insured health care programs. $CNC stock fell 2.65% to $66.80 per share last week, adding to it’s 8% total decline over the past month. Much of the pessimism surrounding Centene last week came as the result of the company’s disappointing Q2 earnings report released on the 27th of July, which highlighted earnings per share of $1.41 compared to EPS of $2.40 last year (a drop of more than 40%). While Centene pessimism expressed in the news has increased 5-fold over the past week after earnings, $CNC stock price did an all-time high of $75 just over a month ago. This week’s most pessimistic Centene article in terms of sentiment expressed:
“Will Centene Stock Rebound After an 8% Drop Last Week?” | Forbes
Time-Sense: Most Speculative🤔⏩ and Reactive😮⏮️ Tickers
⚙️ Ingersoll Rand Inc. ($IR): The stock with the most speculative (ie. future-oriented) news coverage measured in the news this week was Ingersoll Rand (speculation score: 74.6%). Ingersoll Rand is an international provider of industrial equipment and technologies. $IR stock price finished the week up 1.76% after the company announced a secondary offering of nearly 30 million shares of its common stock. Ingersoll also announced the CAD$135.4 million-dollar acquisition of Maximus Solutions last weekend. The recent uptick in M&A activity, along with a relatively positive earnings report released two weeks ago, has intrigued Wall St. analysts, with many speculating about the future of $IR’s stock price. The company’s stock has finished the past month up 13%. This week’s most speculative Ingersoll Rand article based on time-sense expressed:
“Opportunity on Hot Stock? Ingersoll Rand (IR)” | The Union Journal
🎮 Activision Blizzard Inc. ($ATVI): This week’s most reactive (ie. past-focused) stock in news coverage was Activision Blizzard (reaction score: 68.9%). Activision is a video game holding company and the creator of the Call of Duty game franchise. $ATVI stock has fallen 10.77% over the past month — 1.88% over the past week — to $82.43 per share following recent allegations of sexual harassment and discrimination against its female employees. The company’s Blizzard division, which has been the major target of recent allegations, now faces a lawsuit and two-year investigation after more than 2,600 current and former employees staged a walkout and signed an open letter to management demanding immediate changes. Overall, the company has made headlines for all the wrong reasons over the past month, and analysts aren’t expecting any revival in stock price in the near future. This week’s most reactive Activision Blizzard article based on time-sense expressed:
“Why Is Everyone Talking About Activision Blizzard Stock?” | The Motley Fool
Biggest Mood Swings and Changes 🎭🔀
Each week we compare the sentiment of each ticker to its sentiment from the previous week. Presented below are the tickers that saw the biggest change in each of our four sentiment metrics this week compared to last.
🖥️ Microsoft ($MSFT) saw the largest increase in optimism expressed this week compared to last week — followed by UPS ($UPS) in a close second — after reporting spectacular second-quarter earnings of $2.17 per share versus its consensus estimate of $1.92 and building upon its $2 trillion dollar valuation.
👨💻 Adobe Inc. ($ADBE) recorded the largest increase in pessimism expressed this week, partially driven by key articles from SeekingAlpha and YahooFinance arguing that the company’s stock is fully valued and perhaps too expensive to move much higher than current stock prices would suggest.
📶 T-Mobile U.S. ($TMUS) posted the biggest increase in speculative language expressed this week compared to last after posting a Q2 earnings beat and increasing revenue forecasts for the remainder of 2021. As a result, Barron’s upgraded their $TMUS stock ratings. Analyst speculate how the company’s stock price will do in the coming months as it gains some ground on competitors like AT&T ($T).
💉 CVS Health Corp ($CVS) received the biggest increase in reactive language expressed compared to last week after posting earnings on Tuesday. Despite recording strong Q2 EPS, $CSV stock dropped more than 5% following the release of their report. While the company’s earnings have been boosted by COVID-19 vaccine revenues over the past few months, analysts suggest CVS will continue growing over the next few quarters via strong results from its Aetna unit.
4. Market Mood Outlook 🌡️🔭
Following another week of earnings outdoings, stock market news sentiment continues to rise at impressive levels. This week we saw some of the most bullish news conversation to date, driven largely by a combination of higher-than-expected earnings, cryptocurrencies rebounding, and reassuring July employment growth. However, with the majority of second-quarter earnings reports already said and done with, we don’t expect the inflated levels of news optimism to continue ad infinitum — what goes up must come down… eventually.
We will be watching remaining earnings reports from companies like AMC Entertainment ($AMC), fuboTV ($FUBO), Disney ($DIS), and Rocket Companies ($RKT) this week to determine the trajectory of stock news sentiment in the coming weeks. At surface level, the heightened news positivity looks like it can maintain at least into the near-term future. However, I myself am growing warier of the market’s optimism — though stocks have outperformed earnings estimates across all sectors in the past few weeks, all it takes is another cryptocurrency correction or increased shutdowns via the Delta COVID-19 variant for the stock market to correct course.
Enjoy it while it lasts folks, the question: how long will it? That’s all for today’s report, good luck this week everyone, and thanks for reading. 🙏
Signs of the Times
This week’s upcoming earnings schedule from @Benzinga on Twitter:
About
Babbl takes an analytical approach to the news so you can spend less time reading when you invest. Our goal is to bring better market sentiment to retail investors by automating the legwork around investment research. How it works: we scrape the internet for thousands of finance articles and write algorithms to analyze sentiment within the text. These algorithms utilize AI to detect "mood" signals such as optimism and pessimism, and “time-direction” signals measured as reaction (ie. past-oriented sentences) and speculation (ie. future-focused). Each week we summarize the findings of our analysis into a newsletter for our subscribers. In short: we quantify articles to demystify the relationship between the news and the markets. A full description of how our sentiment works (and why it works) can be found here. Visit our website to learn more information and to sign-up for the beta release of our upcoming sentiment dashboard:
This roundup report was written by Ramsey Shaffer, with help from the Babbl Discord and the MoneyMen group. Please note: all information reported here is for informational and educational purposes. We are amateur investors, not financial advisors. If you enjoyed this post, please give it a like below so we know. Have a stock on your radar you’d like us to take a look at? We now sell custom sentiment analysis about any stock or crypto, Click the link below and we can get started on a custom report for you!
https://www.jhinvestments.com/weekly-market-recap
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