Renewed Bullishness + Earnings Incoming 🔁 | News Sentiment Roundup 10/4-10/8

After some abysmal news sentiment two weeks ago, markets and mood bounced back this past week as we head into Q3 earnings season. We dive into sentiment for $TGT, $TWTR, $GPS, and $DOW...

Hello, hello 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 850 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 📰

After an all-around pessimism-fest in news coverage two weeks ago, the sentiment expressed in this past week’s stock market news was relatively bullish. The average article published this week recorded a 0.22 sentiment score (on a scale from -1.0 being most pessimistic to +1.0 being most optimistic) — which is twice the optimism as last week’s average. In terms of time-sense, the average article published this week recorded a 0.27 (on a scale from -1.0 being completely past-tense to +1.0 being completely future-tense) — this is also a slight increase from last week and indicates that analysts wrote about the future a bit more frequently this week. Coupling the average sentiment and time-sense scores, this week’s news coverage is trending more optimistic and more speculative, indicating renewed bullishness about the markets. Here’s a look at the major news events driving conversation sentiment this past week:

📈 Stocks: in another week of choppy trading, the major U.S. stock indexes recovered from a sharp decline on Monday to finish positive overall for the week. With gains of around 1%, the Dow and the S&P 500 outpaced the NASDAQ; large caps outpaced their small-cap peers and the value equity style outperformed. This recovery was reflected in the news sentiment — on the whole stocks were discussed with much more optimism this week than pessimism (only 8 tickers total saw more pessimism than optimism expressed about them, and only 2 tickers were more pessimistic this week than last week).

🦅 Economy: September’s jobs report was published last week. The pace of U.S. jobs growth slowed for the second month in a row and again fell short of most economists’ expectations. The economy generated 194,000 new jobs last month, trailing gains of 366,000 in August and 1.1 million in July. The unemployment rate fell to 4.8% from 5.2%, in part due to people leaving the labor force. 

A congressional agreement reached on Thursday to lift the U.S. debt ceiling averted a potential default on the government’s debt obligations, but the deal was merely a short-term one, so another debt deadline looms in early December. The deal followed weeks of partisan fighting and came less than two weeks before the government faced the likelihood of being unable to pay its bills for the first time ever. Lastly, U.S. treasury bonds fell again on the news, and oil prices climbed for the 7th consecutive week. Now, let’s take a look at the most talked-about tickers:

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 Inc. ($FB) has itself a horrible week, and news sentiment paints the picture. $FB fell -1.62% throughout the week to $330.05, and has now slipped more than 12% over the past month as some analysts now predict that the stock is a few big moves away from tumbling all the way down to the $300 level. It’s safe to say Facebook has been having one of its worst weeks in years — the company experiences unprecedented outages for more than six hours Monday (including it’s WhatsApp and Instagram apps), with Downdetector announcing by mid-day that it had become the largest outage it had ever seen. Facebook engineers were forced to try to reboot servers manually at the company’s datacenters, and while its CTO took to Twitter to admit to the expansive “networking issues”, a root cause for the outage has not yet been announced.

As if the technical difficulties weren’t bad enough for $FB stock (some analysts estimate that it costs the stock literal billions throughout the week), to add insult to injury, on Sunday “60 Minutes” aired a national broadcast of former Faceook data scientist Frances Haugen alleging that the social-media giant has been deceiving investors about how it has been dealing with hate speech and misinformation on the platform. Haugen recently provided thousands of pages of documents to the Wall Street Journal (which formed the basis of the publication’s “The Facebook Files” series). Haugen is scheduled to testify before Congress this Tuesday, and is seeking whistleblower protection in complaints filed with the SEC.

Facebook’s Very, Very Bad Day: Services go dark and stock plunges in wake of whistleblower revelations” | MarketWatch

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

🛒 Target Corp. ($TGT) recovers on pre-holiday season optimism: this week’s most optimistic ticker in stock market news coverage was Target (relative optimism: 100%). $TGT stock finished the week up 0.43% to $228.90 per share to bound back from a -6.4% slump over the past month. Much of the optimism expressed in Target headlines this week was focused on the company’s plans for the upcoming holiday season. Target announced this week that it would be kicking off Christmas deals on October 10th (yes, seriously) with price-match guarantees on all items sold throughout their online and physical stores to gain a competitive edge on rivals like Amazon and Walmart. Target also plans to spend $75 million on hiring fewer holiday season workers than previous years; instead they’ll be paying current employees an additional $2 per hour throughout the coming months.

Other big $TGT news this week was its announcement that it will be partnering with buy-now-pay-later service providers Affirm ($AFRM) and Sezzle ($SZL) in the coming months. The partnership will allow Target consumers to buy products upfront and pay for them in interest-free increments. While $TGT stock only bumped marginally upwards on the deal, $AFRM stock flew 20% after the announcement on Wednesday. Overall, the price-match rollout plus seasonal employee strategy plus buy-now-pay-later plans seem to bode well for Target to be much more competitive this holiday season than in previous years. This week’s most optimistic $TGT article:

Target Launches Holiday Price-Match Gaurantee to Gain Competitive Edge” Fox Business

🐤 Twitter Inc. ($TWTR) stock climbs behind new features, analysts aren’t impressed yet: this week’s most pessimistic ticker in news coverage was Twitter, despite $TWTR stock rising 4.33% over the past 5 days to $63.68. Analysts who’ve complained about Twitter’s stagnant rate of innovation in the past can no longer blame Jack Dorsey for lack of effort. $TWTR has made headlines in recent weeks behind a slew of new feature plans. After ditching its “fleets” feature and retaining “spaces”, Twitter has now enabled users to send Bitcoin “tips” via its Lightning Network, added newsletter and other customizable header features, and rolled out “superfollows” — all attempts for it to become a more homogenous social media platform and compete more directly with specialty platforms that have been stealing its thunder (namely Clubhouse, Substack, and OnlyFans).

Despite expanding its palette of user abilities on the whole over the past few weeks — which feels like a much-needed step in the right direction for the stock — analysts worried this week that Twitter’s newfound ambitousness may actually be a sign of a desperate company pulling straws (Twitter has been notorious for its lack of profitability relative to competitors like Facebook). Other pessimistic headlines for Twitter this week included its announcement on Wednesday that it would be selling its mobile ad platform MoPub to marketing software maker AppLovin, and headlines from the likes of Fox Business accusing the company of enabling the Taliban via its Tweet promotion algorithms. This week’s most pessimistic Twitter article:

“Twitter is Selling MoPub to AppLovin” TechCrunch

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

👖 Gap Inc. ($GPS) sees new intrigue with Kanye + AI acquisition: this week’s most speculative stock in news coverage was The Gap. $GPS stock fell -1.15% to $23.20 on the week, and has now fallen 30% over the past 6-months. Even so, analysts pondered Gap heavily this week, wondering if its stock may have the potential to gain some momentum in the coming months behind a few of its recent strategic plays. For one, the first batch of Yeezy x Gap hoodies have started arriving at U.S. stores, causing a flurry of reaction on social media and in the headlines. Gap’s recent limited-release collaborations with the Kanye brand have seemed to bode well with younger demographics, but the question remains whether or not it will be enough to keep the otherwise outdated brick-and-mortar clothing chain moving in the right direction financially.

Gap at least appears to recognize that it has been lacking in its online and technical capabilities for some time now. As somewhat of a statement, the company also announced this week that it will be acquiring Context-Based 4 casting Ltd. (CB4) — a New York based start-up that uses artificial intelligence and machine learning to improve custom experience and drive sales through predictive analytics and demand sensing. While $GPS recent past has been a dim one, their appears to be some potential for a brighter future if the strategic play can pan out. Couple this with a potential trendy revival from its partnership with Kanye, and Gap could very well see blossoming sales in the coming quarters. This week’s most speculative $GPS article:

“More Gains Left for Gap’s Stock?” Forbes

📈 Dow Jones Industrial Average ($DOW) may be make-or-break this week after disappointing job numbers: this week’s most reactive ticker in stock market news coverage was the DJIA. $DOW finished the week relatively flat, rising only 1.26% back to its $34,746.25 mark, remaining a few ticks below the all-time highs it set back in August. The Dow’s docile week fell on the back of the September jobs report released Friday by the Labor Department — the headline number was a major disappointment as the economy added just 194,000 jobs last month, well below the Dow Jone’s own estimate of 500,000. On the positive side, the unemployment rate itself fell to a much lower point than economists forecasted (4.8% — the same level seen in late 2016).

While many analysts consider last week a win for the market overall, the market’s latest attempt at a rally appears to be nearing an inflection point. All three major indexes hit resistance at key levels over the past week as Treasury yields continue to climb — in order for the market to breakout any further, the Dow and friends will need to get above their resistance level and follow through this week to confirm the attempt. This past week’s most reactive $DOW article:

“Dow Closes Near Flat Line on Friday After Jobs Report Miss, But Notches Winning Week”  CNBC

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.

🛒 Walmart Inc. ($WMT) saw the largest increase in optimism expressed this week compared to last week after a cluster of articles were published arguing that its stock has now reached “undervalued” territory. While $WMT has fallen roughly 7% over the past month behind supply chain issues and controversy surrounding its employee vaccination mandate, analysts collectively expect the world’s largest retailer’s stock to rise by an average estimate of 25% over the next 12 months.

📳 Facebook Inc. ($FB) recorded the largest increase in pessimism expressed this week behind its “worst day ever” (insert GIF of Mr. Krabs playing the world’s smallest violin). As stated above: $FB stock had its worst single-day performance in over a year amidst sweeping outages and blistering whistleblower accusations.

👖  Gap Inc. ($GPS) posted the biggest increase in speculative language expressed this week compared to last behind the preliminary release of its Yeezy x Gap sweatshirt partnership and its announced acquisition of artificial intelligence start-up CB4 — analysts speculate the stock may be worth much more in a year from now if it can keep up the strategic revitalization.

🛒 Costco Corp. ($COST) received the biggest increase in reactive language expressed this week compared to last week behind positive price target revisions. While $COST currently sits around the $450 per share mark, Cowen analysts Oliver Chen gave the stock an upgraded price target of $520 behind the retailer’s strong financials and competitive pricing advantages heading into the holiday season.

4. Market Mood Outlook 🌡️🔭

Stocks fought back from their tumble two weeks ago and rallied to end this past week. After a relatively bullish week of stock market news coverage, this week is likely to be a bit of an inflection point for the markets. With the major indexes experiencing resistance at their current levels, we will look to data from the Consumer Price Index (which comes out this Wednesday) to paint the picture for the overall economy, and the markets by association.

Q3 earnings season is also right around the corner, with major banks kicking off their reports to end this upcoming week. If all goes well, we can expect to see more upward momentum in stock market news sentiment, which could carry over into a continued rally in the market itself. Of course, bad news out of the CPI and disappointing earnings results could easily rain on that parade. According to FactSet as of October 4th, heading into Q3 earnings, 56 companies have recently lifted their guidance compared with 47 that cut their forecasts. That’s all for today’s report; good luck this week everyone, and thanks for reading. 🙏

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