Happy Halloween folks! 🎃

Welcome to this week’s Market News Roundup 🗞️ — here’s the agenda for today’s quick stock market news review:

1. 🖼️ big picture: this week’s overall market sentiment

2. 📊 interesting set-ups: a few stocks worth watching

3. 🔭 Market Mood™ outlook for the week(s) ahead

I. Overall News Sentiment 🖼️

• Overall news: +24% sentiment, bullish🟢

• S&P 500 (large cap) news: +29% sentiment, bullish🟢

• Russell 2000 (small cap) news: +50% sentiment, bullish🟢

💥 Markets pop for the 2nd straight week on positive momentum:

• After climbing +5% last week to break the chain of negative weekly results, the major US stock indexes all posted another week of positive outcomes. In particular, the S&P 500 added +3%, the Russell 2000 added +5%, and NASDAQ notched +7% while the Dow climbed for its 6th straight week.

🍔 Recession over? GDP surprises most by climbing +2.6% in Q3:

• In a surprise twist of fate, the third-quarter GDP report released this week revealed that the US economy actually grew over the past three months, and at a handsome rate of 2.6% year-over-year to boot.

• Considering the previous two quarters marked consecutive declines in gross domestic product (qualifying as a technical recession), this week’s report was a strong bullish sign for the markets and the Fed Reserve ahead of next week’s pivotal FOMC meeting.

📝 Q3 earnings are somewhat dissapointing, & margins are shrinking

• In a giant week for corporate earnings calls, 164 of the S&P 500 companies (or almost 50% of the index’s market cap) reported Q3 results last week. While a near majority of companies are reporting at or above analyst estimates, a few big dogs fell hard — particularly Amazon and Meta ; each fell roughly -20% this week, both owing to shrinking profit margins.

📰 Other noteworthy headlines:

• Elon moves in as the new CEO of Twitter, and he brought his own sink!

• 10-year yields fell back to 4.02%, finally snapping its 12-week climb1

• The NAR reported a -10% month-over-month decline in pending home sales

II. 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:

Snap Inc. (SNAP) 👻 bearish sentiment 🔴

this week: 🔻-93% news sentiment | 🔺+32% stock price | view news profile 📰

Sticking with the ghostly Halloween vibes, the most bearish ticker in this week’s stock market news coverage was none other than Snapchat parent company, Snap. The craziest part here is the way in which Snap managed to do it: finished with a -93%🔴 news sentiment rating, and rose by +32% in stock price over the course of the same week -- but how??

For context, Snap’s rocket price rally this week came in reaction to its equally spectacular drop the week prior, when it fell -28% after the company issued a disappointing third-quarter earnings report. In the report, Snap revealed underwhelming revenues and a significant decline in earnings per share despite showing solid user growth year-over-year — perhaps signaling an inability to monetize its user base meaningfully.

Looking back at this week’s Snapchat price & sentiment, analysts are attributing the stock’s big reversal simply to opportunistic swing traders who saw that Snap was oversold and played the winds of the rallying market correctly. Considering Snap’s sentiment, most of the negativity seems squarely attributable to these monetization issues, and more specifically to a lack of advertiser spending. What’s worse is that the company doesn’t necessarily expect things to look better next quarter. More here:

top Snap Inc. articles this week:

Texas Instruments (TXN) 🧮 bullish sentiment 🟢

this week: 🔺+88% news sentiment | 🔺+0.7% stock price | view news profile 📰

With a bit less intrigue but just as much chutzpah, major semiconductor player Texas Instruments finished this week as one of the most bullish stocks in Wall Street conversation, coming off its Q3 earnings report outperformance with a little sheen of optimism. 

The chipmaker reported earnings after hours on Tuesday, beating analyst estimates on its revenues and earnings per share while growing both considerably year-over-year, a strong signal that the old hound’s still got what it takes to compete in such a burgeoning industry. One point of caution out of the call was TXN’s downbeat guidance for the next 3 months — which the company attributes to chip demand “weakness that’s spread beyond personal electronics to affect Industrial, which to date has been resilient.”

While at first this may sound worrying, analysts tend to agree that Texas Instruments’ scale and durable competitive edge in the analog computing product space both far outweigh any near-term challenges (you all remember using a TI-30X in high school algebra right? or just me?). Considering its solid price-to-earnings ratio of 16.9 and its comparable price to crowd-favorite peer Nvidia, long-haul semiconductor investors might do well to pay attention to TXN:

top Texas Instruments articles this week:

III. Market Mood™ Outlook 🔭

Finally, a quick look at what’s on the horizon:

FOMC Meeting this week:

This past week’s positive GDP report was a nice win for the markets; a surprise that many analysts admittedly didn’t have priced in. The question remains: will the Q3 GDP growth materially change the Fed’s interest rate decision at the upcoming Federal Open Markets Committee meeting this week? A few notes:

• The default Wall Street opinion thus far has been that the Fed will hike interest rates this week by an additional +0.75%, bringing the fed fund rate to around 4% in a considerably restrictive economic environment. However, with the release of last week’s positive GDP report, some folks believe the Fed may be able to avoid the full +0.75% hike and commit to a smaller +0.50%, considering the GDP growth as a sign that the economy is just fine.

• Looking deeper at the +2.4% increase in US GDP last quarter, it’s hard to give ourselves too much credit. Under the hood, the rebound is mostly due to a boost from net trade (ie. the US importing less and exporting more) rather than a truly expanding US economy. With the global economy weak the US dollar almost 20% higher year-over-year, it’s likely that this surge in exports will fade in the coming quarters.2 

• IF this quarter’s GDP numbers really are overstated, and the FOMC agrees that it is, then we can expect nothing less than +0.75% hike in interest rates to maintain the Fed’s hawkish trajectory. 

Corporate earnings ahead:

This upcoming week is set to be another huge one for Q3 earnings reports, with a jam-packed schedule Monday through Friday (full list from @eWhispers):

As always, the future remains to be seen — 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 cited below: