Welcome to our weekly Market News Roundup 🗞️ and a special thank you to our 25 new subscribers this week, thanks for being here.

Here’s the agenda for today’s quick news review:

1. 🖼️ Big Picture: this week’s overall market sentiment

2. 📊 Interesting Set-Ups: a couple stocks worth watching

3. 🔭 Market Mood™ outlook for the week ahead

1. Overall News Sentiment 🖼️

• Overall news: -18% sentiment, slightly bearish🔴

• S&P 500 (large cap) news: -9% sentiment, slightly bearish🔴

• Russell 2000 (small cap) news: -6% sentiment, neutral

🤒 Another big rate hike from the Fed leaves a bitter taste 🔴

For the third FOMC meeting in a row, the US Federal Reserve pushed to keep inflation in check by approving another +75bps (0.75%) increase in the benchmark interest rate. This hike pushes the rate to a range of 3.0% to 3.25% — a level last seen in 2008, and the fastest acceleration of interest rates we’ve seen in modern US history. Fed officials project they will lift the rate by at least another +1.25% over the last two meetings of the year; investors are skeptical (more here):

🥶 Stocks continue their tumble towards year-to-date lows 🔴

Picking up where they left off and following suit from the Fed’s meeting early last week, the major US stock indexes fell further for the fifth time in six weeks to levels close to their year-to-date lows.1 The latest losses of around -4% and -5% across the S&P, Dow, NASDAQ, and Russell were similar in scale to the previous week’s steep declines, bringing the S&P 500 in particular back below its -20% bear-market threshold.

💷 ForEx frenzy: British pound collapses towards all-time lows 🔴

Across the pond, the British pound crashed to a record low against the US dollar on Monday on growing fears about the stability of UK government finances. This comes after the Bank of England raised its benchmark lending rate from 1.75% to 2.25% last week — a level last seen in 2008. This marked the seventh meeting in a row at which the bank has lifted rates.

2. Stocks to Watch 🔥🧊

Now, a quick look at two notable stocks to keep an eye on based on their sentiment detected in stock market news coverage this week: Boeing and J&J

Boeing (BA) ✈️ bearish sentiment 🔴

this week: 🔻-93% news sentiment | 🔻-8% stock price | view news profile 📰

In a rough week across the board, aircraft giant Boeing went above and beyond, finishing as one of the most bearish stocks in market news coverage and trading lower by -8% on more than just downward market momentum. Amongst a slew of negative headlines, the most notable news nugget for Boeing this week came from an SEC filing announcing that the company will be required to pay out a $200M fine over charges that it misled investors about two fatal 737 Max crashes.

The US stock market regulator said that Boeing’s former chief executive Dennis Muilenburg made false statements about the aircraft’s safety issues, “putting profits over people” in an effort to rehabilitate the company’s image (the 737 Max was grounded for 20 months after two crashes killing 346 people between 2018 and 2019). Boeing also made pessimistic waves this week after announcing in an all-hands virtual meeting that it will begin another round of corporate layoffs nationwide, cutting 150 finance & accounting jobs coming in October with an additional batch expected to come next year and the year after. More here:

top Boeing (BA) headlines this week:

“737 Max: Boeing to pay $200m over charges it misled investors” ~ BBC

“Boeing starts layoffs in Finance & Accounting, will outsource the work to India” ~ Going Concern

Johnson & Johnson (JNJ) 💊 bullish sentiment 🟢

this week: 🔺+71% news sentiment | 🔺+1.7% stock price | view news profile 📰

After finishing at the top of the bullish news sentiment list last week, Johnson & Johnson came out as with the most optimistic news coverage on Wall Street *again* this week with a net sentiment score of +71%. While the majority of the market has fallen flat the past two weeks, shares of the healthcare & pharmaceutical giant have continued climbing, rising another +1.7% this week as investors seek shelter from the carnage amongst small-caps and tech stocks.

Shares of J&J are still down around -2.5% year-to-date after the upward trend of the past few weeks, but its performance has been bright compared to the broader S&P 500’s decline of -21% over the same period. The majority of optimism expressed about Johnson & Johnson in news coverage this week centered around exactly that — its status as a blue chip value stock with the virtue of stability amidst the market’s broader period of volatility; by the numbers, 65% of articles about J&J this week mentioned the term “value” or “stable” in reference to the stock. In addition, headlines this week continued to express positivity about the company’s stock buyback program announced last week (which we covered here).

top Johnson & Johnson (JNJ) headlines this week:

“Why Johnson & Johnson stock defied the market downturn today” ~ The Motley Fool

“Best stocks to buy now? 2 Dow Jones stocks to watch this week” ~ StockMarket.com

3. Market Mood™ Outlook 🔭

After the 4th consecutive week of overarching bearishness🔴 expressed in stock market news coverage, driven by a double-digit decline in stock prices, steeply rising US treasury bond yields, and hawkish efforts to curtail runaway inflation from the Fed, we are beginning to wonder two things: 1) when will the worst of it be over, and 2) what usually happens next? The short answer is that while we can expect some more market carnage in the near future, the following 12-to-24 months after a period like this are when fortunes are made. Let’s dive in:

1. When will the worst of it be over?

• Over the short-term, we are seeing investor pessimism of historic proportions, with options trading put volume reaching an all-time high as of last Friday (below). This may well be a sign of the fear-and-greed pendulum swinging too far into “fear” territory, and perhaps I’d expect a few strong days on the market over the next two weeks in rebuttal.

• However, the more broad trend accompanied by inflation and the Federal reserve’s aggressive interest rate plan seems to point toward a continued bear market through the remainder of the year into early 2023, especially given the drastic lowering of Q3 earnings expectations set for next month.

2. What happens when we find bottom?

• While monetary-policy tightening phases can be painful for stock- and bond-market returns, it seems we’re closer to the end of the Fed’s campaign than the beginning. The good news is that the earlier portion of the rate-hiking phase is typically what produces the most negative market performance, and historically speaking, market returns are often slightly favorable during the final few rate hikes.2

• Also considering the market’s retest of its bear market lows this week, it makes sense that we are experiencing such high degrees of pessimism. Looking ahead, S&P 500 performance in the 12-to-24 months following such a late-bear-market low (especially accompanied by the end of a rate cycle) tends to be quite strong, averaging a return of 1.25x over the past 50 years. More here from Edward Jones:

As always, the future remains to be seen. That’s all for this week — let us know if there’s anything we missed by commenting below, replying to this email, or emailing us directly at [email protected]. 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, stay safe out there, and thank you for reading. 😎

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, cited below: