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: +28% sentiment, bullish 🟢

• S&P 500 (large cap) news: +4% sentiment, bullish 🟢Russell 2000 (small cap) news: -67% sentiment, slightly bullish 🟢

➡️ Stocks finish the week relatively unchanged

• The major US stock indexes all posted changes of less than 1% in either direction this week, remaining neutral but failing to build on last week’s strong post-CPI momentum.

• Overall, larger caps continued to outperform smaller cap stocks — the Dow posted the top result of the week (+0.25%), followed by the S&P 500 (-0.32%), then the NASDAQ (-0.74%) and Russell 2000 (-1.3%). Zooming out, the Dow Jones’ positive performance of late puts it only -5.3% below its high from November 2021.

🏭 More moderating inflation data this week from the PPI

• Stocks rallied on Tuesday this week after the US government’s release of the monthly Producer Price Index, which showed that wholesale prices rose by 8% from a year before.1 

• While this is still historically high, the big news here is that it was the smallest increase since July of last year, and significantly better than forecasts. Building on last week’s Consumer Price Index, it’s the 2nd inflation report this month to indicate that rising prices are cooling.

🛒 Retail sales are back on the rise ahead of the holiday season

• After a flat result in the previous month, another US governement report this week revealed that US retail sales rose sharply in October, jumping a seasonally adjusted 1.3% — yet another somewhat reassuring sign in spite of inflation.

• On the whole, shoppers spent more on increasingly expensive everyday staples such as gasoline and food, but also shelled out more on discretionary items such as cars, furniture, and restaurant meals.2

📰 Other noteworthy headlines:

• US Treasury bond yield curve surpasses 70% inversion…

• US home sales in October fell for the 9th straight month, according to NAR

• European stocks bounced back to outperform the S&P 500 this week

• US crude oil fell back below $80/barrel for the first time in nearly 3 months

• More company-specific headlines from our friends at BullishRippers

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:

Bed Bath & Beyond (BBBY) 🛁 bearish sentiment 🔴

this week: 🔻-93% news sentiment | 🔻-7.6% stock price | view news profile 📰

Retail chain Bed Bath & Beyond finished this week highly bearish in market news coverage (-93%) and fell hard in share price (-7.6%) after announcing Monday that it plans to issue stock to repay a small portion of its hefty debt load. This stock — approximately 11.7M shares — would be issued to select bondholders in exchange for paying off a small portion of its roughly $1B debt load.

Of course, this is bad news for current shareholders of Bed Bath & Beyond’s stock, as a large stock supply pool will inherently bring down the price of existing shares. What’s more is that BBBY is a relatively popular stock amongst retail investors, so the fact that these new shares will not be directly available to the public also bodes poorly for its existing retail base. Zooming out, repaying debt over the near-term could be vitally important for the retailer in its fight to win back customers ahead of what could be a make-or-break holiday season…

top BBBY article(s) this week:

Kroger (KR) 🛒 bullish sentiment 🟢

this week: 🔺+86% news sentiment | 🔺+2.7% stock price | view news profile 📰

Major American grocer Kroger ended this week with highly bullish sentiment expressed in market news as Wall Street analysts reacted & speculated about its deal to purchase major competitor Albertsons. The proposed acquisition -- which was originally announced last month -- has gained traction more recently amidst antitrust allegations from the likes of Bernie Sanders & Elizabeth Warren.

The concern for regulators (and opportunity for investors) is that the monster merger has the potential to completely reshape the US retail grocery landscape (see below). As it sits currently, Walmart holds more than 20% market share, while Kroger is the nation’s 2nd largest grocer (9.9%) and Albertsons is the fourth largest (5.7%). Such a deal would catapult Kroger-Albertsons to above 16% share, instantiating a new grocery duopoly alongside Walmart and perhaps instigating other deal proposals from its competition jockeying for position in the space.

top Kroger article(s) this week:

III. Market Mood™ Outlook 🔭

Finally, a quick think about what’s on the horizon:

⚠️ Recession outlook — more warning signs

• After another overall positive week of market news coverage, many seem somewhat confident that the worst of economic timult could be behind us — reacting strongly to the seemingly cooling inflation reports of the past two weeks. HOWEVER, the Fed remains adamant that we are still too early to definitively say whether the economy is back on track, and many signs point to the market’s recent outperformance becoming a bear rally in the broader scheme of an impending recession.

• If we consider just one potential signal, let it be the inversion of the US Treasury bond yield curve. Right now, the curve is at a 76% inversion, the likes of which have been followed by a recession in every single instance over the past 50 years — whether its the catalyst or the byproduct, it’s a strong sign that the Fed’s interest rate actions will likely push the US economy into recession territory on its route towards controlled inflation. 👇

📊 Before we worry, more economic data ahead

• That said, Wednesday will provide a cornucopia of economic data for the truncated holiday week. Releases scheduled for this week include meeting minutes from the Federal Reserve’s recent FOMC meeting, consumer sentiment data, new home sales, and weekly unemployment claims. All will hopefully do clear up the murky economic picture as we position ourselves for another interest rate increase in four short weeks.

• If the data comes out strongly enough, perhaps there will be enough for the Fed to pause hikes ever-so-slightly. On the other hand, if the Fed does not pivot from its current rate hike trajectory (which seems unlikely at this moment in time), then a 2023 recession is much more probable than not.

🗓️ Last call for earnings calls

• Finally, for the shortened Thanksgiving holiday week, we’ll see one final crop of third-quarter corporate earnings releases Monday through Wednesday. Keep in mind, the markets will be closed Thursday, then reopened for a shortened trading day on Friday:

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: