Market News Roundup 5/2-5/8: Inflation Station🚆
Market news sentiment continues its bearish trend as stocks reach their worst start to a year since 1939 -- we dive into a few of the optimistic ones, including AMD, PFE, CME, and ROKU...
Hello! Welcome to another weekly Market News Roundup 🗞️ and a huge shoutout to our 10 new subscribers this week!
this is your weekly screener of stock market news coverage, quantifying the hype and bringing you the top bullish, bearish, and trending stocks parsed from thousands of news articles.
Based on some recent feedback from you all, today’s post looks a bit different than previous weeks:
🖼️ Big Picture: this week’s overall news sentiment
📊 2 trending stocks (AMD, Pfizer)
📈 2 bullish stocks (CME, Roku) & 2 bearish stocks (AMC, HBSC)
🔭 Market Mood™ outlook for the week ahead
1. 🖼️ Overall News Sentiment
Sentiment measured in stock market news coverage was bearish overall this week, finishing with an average sentiment score of -22% (on our scale from -100% to +100%) across roughly 2,500 market news articles published. Of stocks mentioned in more than 20 articles this week, roughly 70% ended the week with a net-negative sentiment score — the highest weekly rate of negative sentiment scores thus far in 2022. This week’s overall market mood was punctuated by the following topics and events:
📈 US Stocks keep falling: 🔴 the major US indexes declined for the 5th consecutive week after a rapid shift in sentiment sent stocks reeling on Thursday; the NASDAQ fell -1.5%, while the S&P 500 and Dow fell roughly -0.2% — for reference, the S&P 500 is now trading at its lowest levels since last June.1
🗓️ Earnings beat expectations: 🟢 approximately 87% of companies in the S&P 500 have reported first-quarter earnings as of Friday. Of these, quarterly profits have increased by an average of ~9% versus last quarter, exceeding the 7% rate that had been projected at the end of the previous week.
🦅 Interest rate hike: 🔴 as expected, the U.S. Federal Reserve approved an interest-rate increase of half a percentage point in their meeting this week ꟷ twice as big as March’s quarter-point hike. While further increases are still to come, Chair Jerome Powell said the central bank wasn’t considering sharply raising rates in increments of three-quarters of a percentage point at a time.
🛢️Oil climbs back up: 🔴 after cooling off through most of April, the price of U.S. crude oil rebounded on Friday to more than $110 per barrel, the highest level since late March. The price was lifted by impending European Union sanctions on Russian oil and the potential for tighter global supplies, though some analysts expect prices to fall back pending the G-7 crude oil plan.
2. 📊 Trending Tickers
Despite this week’s high clip of net-negative stocks in news coverage, there were a few diamonds in the rough. Here’s our notes on a few trending tickers this week:
Advanced Micro Devices ($AMD) 💽 earnings = slayed🗡️
this week: +3.1% news sentiment 🟢 | +11.3% stock price 🟢 | ⭐BUY RATING⭐
Semiconductor manufacturing giant AMD made its mark in news coverage and the market this week, finishing with the biggest jump in headline volume of any stock on the market (+69%, nice) and posting a net positive news sentiment score (+3.1%) after smashing Q1 earnings estimates in its quarterly report on Tuesday afternoon.
The report revealed earnings per share of $1.13 (vs. 91-cent estimates, more than double last year’s EPS of 52-cents in Q1 2021), highlighting synergies from its recent Xilinx acquisition and showcasing accelerating growth across all of its business segments (impressive). After the call, AMD stock finished +11% on the week, one of its best weeks thus far in 2022.
Top AMD reads this week: 📰
Pfizer ($PFE) 💊— are its Covid revenues too good? 🤔
this week: +50% news sentiment 🟢 | +2.9% stock price 🟢| ✋HOLD RATING✋
Of all the top “trending” stocks in this week’s news coverage, pharma-giant Pfizer finished with the most bullish overall sentiment measurement (+50.6%) after reporting its Q1 earnings on Tuesday and beating analyst estimates. According to the report, Pfizer’s quarterly revenues grew 77% to more than $25B year-over-year, owing primarily to a $13.2B boost💉from Covid vaccines.
Pfizer’s EPS came in at $1.62 (vs. $1.47 expected), though they lowered their earnings guidance for the remainder of the year, citing R&D costs along with “adverse” foreign exchange dynamics (they still project roughly $100B in total sales for 2022). Despite this lowered guidance, revenue is forecasted to continue growing behind “strong signs for increasing demand for Paxlovid” — the company’s more recent antiviral pill treatment for Covid. However, some analysts are beginning to think Pfizer may be too dependent on this COVID-19 revenue, with nearly 60% of quarterly sales stemming from its Covid products.
Top Pfizer reads this week: 📰
3. 📈 Most Bullish & Bearish Tickers
Notes on a few tickers with the most bullish / bearish sentiment expressed in this week’s market news coverage vs. the previous week:
Top Bullish Stocks:
CME Group ($CME) 💱— up on high trading volumes
this week: +168% news sentiment 🟢 | -4.1% stock price 🔴 | ✋HOLD RATING✋
CME Group (known for its subsidiary the Chicago Mercantile Exchange, aka the world’s largest financial derivatives marketplace) finished with the biggest increase in bullish sentiment measured in stock market news coverage this week after posting better-than-expected earnings in its recent Q1 results, with net revenues increasing +7% YoY to $1.35B and adjusted net incomes increasing 22% YoY to $702M.
As a financial exchange company, CME makes its money off of transaction fees when traders (like us) buy stock options (calls, puts). CME has done particularly well in recent quarters for the simple fact that investors are trading stocks more frequently right now than ever before (ie. lots of people are currently readjusting their portfolios). The good news: exchanges like CME will keep benefiting if these trends continue. The bad news: most of the options activity right is from short-sellers (meaning the majority of traders expect the markets to move downward as a whole).
Top CME reads this week: 📰
Roku ($ROKU) 📺 — optimism from earnings & Netflix
this week: +111% news sentiment 🟢 | +4.4% stock price 🟢 | ⭐BUY RATING ⭐
The US’s number one streaming service Roku finished the week with highly optimistic news sentiment and climbed as much as +18% in share price by Wednesday after reporting its Q1 earnings on April 28th. The report revealed total net revenues of $734M (+28% YoY) with gross profits up 12% YoY to $365M, both slightly exceeding analysts’ estimates. On top of this, Roku expects revenues to grow an additional 35% throughout the rest of the year.
Perhaps the biggest nugget of optimism for Roku came in conversation relating to Netflix. In the wake of its historically bad earnings two weeks ago, Netflix announced it will be exploring a cheaper ad-supported tier — analysts argue that this would ultimately bode extremely well for Roku, because Roku makes roughly 88% of its money from ads on its devices (at a roughly 60% gross margin), meaning more ads streamed on Roku TV’s (via Netflix) equals more money in Roku’s (and its shareholders’) pockets.
Top Roku read this week: 📰
Top Bearish Stocks:
AMC Entertainment ($AMC) 🍿— bearish earnings ahead?
this week: -592% sentiment 🔴 | -8.9% price 🔴 | ❌SELL RATING❌
Shares of $AMC fell nearly 9% this week, furthering its downtrend since the end of March as retail investors continue to rotate their money out of meme stocks of the like — AMC’s corresponding news sentiment finished more bearish than any other stock on the markets, highlighted by pessimistic speculation ahead of the company’s Q1 earnings report scheduled for after-market on Monday, May 9th.
Analysts currently expect AMC to report a loss per share in the quarter of $0.73 (far worse than the prior quarter’s loss of $0.11 per share) with revenues forecasted at $743.4M (which would be a -6.6% decline from the previous quarter). While some of this stems from inflationary pressures as consumers remain hesitant in their return to movie theaters, a big chunk of this decline can be attributed to its recent investment in a struggling gold mining firm (Hycroft Mining) for $27.9M — AMC also indicated this could be the first of more investments in “distressed assets”, potentially as a ploy to keep its eccentric investors happy.
Top AMC reads this week: 📰
HBSC Holdings ($HBSC)🏦— shareholders want a breakup
this week: -241% sentiment 🔴 | +0.8% price 🟢 | ❌SELL RATING❌
London-based banking giant HBSC finished with highly negative sentiment expressed in stock market news coverage this week after its largest shareholder, Chinese insurance giant Ping An, called for HSBC Chairman Mark Tucker to break up the company into separately traded stocks (one for its Asian operations, another for its European and North American operations).
This news was a bit perplexing for analysts, especially given the longtime relationship between HBSC and Ping An. It appears to highlight the ongoing regulatory strife between the Chinese stock market and the rest of the world (which may be why Alibaba, $BABA, is trending pessimistically in market news this week), and while the odds of an actual breakup appear low (mainly because it would likely cost HBSC billions), it signals an ill-shifting relationship between the two major partners.
Top HBSC reads this week: 📰
4. 🔭 Market Mood Outlook
Stocks continued their downward trajectory over the past week, culminating in what is now the S&P 500’s worst start to a year since 1939 (!!) — as such, market news sentiment remained relatively pessimistic overall throughout the week, though the amount of optimism expressed increased markedly on Saturday and Sunday. Here’s the big picture for what we’re seeing right now and what to expect in the week’s ahead:
First, we now know that inflation is running extremely hot — much hotter than anyone could’ve expected 6-months ago when its pressures began.2 As such, the Federal Reserve is currently in the early stages of its tightening campaign (which has the sole purpose of curbing these pressures).
The good news: the fundamentals of the economy remain relatively sound; consumer finances are healthy, employment is solid, and corporate earnings have held up nicely. According to Edward Jones, the latest trends indicate inflation seems to be peaking and potentially heading lower over the coming months.
The bad news: the market seems to be clearly pricing in a recession, with the economy slowing on a variety of readings (some key points are housing prices at historic highs, and market’s major correction which has come from declining valuations, primarily in tech).
Looking ahead over the next week, there are a few key pieces to pay attention to: First, a Consumer Price Index report scheduled to be released on Wednesday will show whether the U.S. economy got any relief in April from surging inflation. Second, a considerable crop of corporate earnings scheduled for this week (the complete list is shown here by @eWhispers on Twitter).
That’s all for this week — let us know if there’s anything we missed by commenting below, replying to this email, or sending us a text at +1 (833) 878 9106. And if you liked this post, please support us by clicking the like button! Best of luck to all of you in the markets this week, and thank you for reading. 😎
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Disclaimer: This is not financial advice or recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Credit to the respective teams at John Hancock Investment Group and Edward Jones.