Hello! Welcome to another weekly Market News Roundup 🗞️

Here’s the agenda for today:

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

2. 📊 1 trending stock ($AMZN)

3. 📈 1 bullish stock ($GOOGL) & 1 bearish stock ($HOOD)

4. 🔭 Market Mood™ outlook for the week ahead

1. 🖼️ Overall News Sentiment

Overall sentiment measured in stock market news coverage fell to its most pessimistic levels of the past three months this week, finishing net-negative on each of the past 7 days and reaching an aggregate sentiment score of -47% on our scale from -100% to +100%, indicating high degrees of bearish conversation on Wall Street. Zooming in, sentiment expressed about the large-cap S&P 500 finished the week with a highly-pessimistic score of -61%, while sentiment expressed about the smaller-cap Russell 2000 finished at a slightly-less pessimistic score of -23%, both driven by the following topics and events:

📈 US Stocks: the major indexes fell for their fourth week in a row, declining around 2% to 4% in choppy trading during the heart of earnings season. The tech-heavy NASDAQ trailed the S&P 500 and Dow again and is now officially in bear market territory, having lost 23% since its record high back in November.1 For the month of April as a whole, the NASDAQ finished down -13% (its worst month since October 2008), while the S&P 500 and Dow fell roughly -9% and -5% respectively. This downward market trajectory was punctuated by high price volatility across the board, with the VIX (which measures investors’ expectations of short-term volatility) jumping 47% over the past two weeks.

🦅 Economy: the US government’s GDP report released this week revealed that the economy shrank at an annual rate of -1.4% over the first quarter of 2022 (compared to full-year GDP growth of +5.7% in 2021), marking the worst quarterly GDP result since the second quarter of 2020, when the pandemic triggered a brief recession. This recent drop in Q1 production was spurred primarily by surging inflation — which just saw its highest 12-month gain in more than four decades, according to April’s Personal Consumption Expenditures Price Index released by the Federal Reserve on Friday.

2. 📊 Trending Tickers

Amazon Inc. ($AMZN): 📦 — EARNINGS NEWS 📰

this week: -0.9% news sentiment 🔴 | -13.7% stock price 🔴

In a news week dominated by big tech earnings, the biggest of them all was arguably Amazon, and for mostly negative reasons. $AMZN was one of the most-mentioned stocks in news coverage, finishing with a net-negative news sentiment score of -0.9% and falling nearly 14% in share price (its worst week on the market since 2006) after posting one of its more discouraging earnings reports in recent memory.

In its Q1 report on Thursday, Amazon announced quarterly earnings of $7.38 per share, missing analysts’ estimates by roughly 12% (or 98-cents per share), owing somewhat to a $7.6 billion loss on its recent investment in electric vehicle maker Rivian ($RIVN), which lost more than half its value in the quarter. The report also revealed quarterly revenues of $116.44B, and while this did manage to slightly exceed analysts’ estimates of $116.2B (driven mostly by solid revenues within its Amazon Web Services division), it was only a mere 7% increase from the previous quarter, marking Amazon’s slowest revenue growth since way back in 2001, during the dot-com bubble (for reference, I was 4 years old). What’s more, the company’s second-quarter forecasts suggest this growth could dip even further to between 3% and 7%, citing a slew of high-level challenges including rising inflation, higher fuel and labor costs, global supply chain snarls, the ongoing pandemic, and the current conflict in Russia-Ukraine.

Our Thoughts: SELL 🟥

3. 📈 Most Bullish & Bearish Tickers

my notes on a few tickers with the most bullish / bearish sentiment expressed in this week’s market news coverage:

Alphabet Inc. ($GOOGL) 🖥️ — BULLISH SENTIMENT🔺

this week: +46% news sentiment 🟢 | -4.19% stock price 🔴

On the slightly cooler side of the pillow this week was another capital-A big tech stock: Alphabet, aka Google and Youtube’s parent company. Like Amazon, Alphabet also posted its Q1 earnings report this week, in which it also missed analysts’ earnings estimates (with EPS of $24.62 vs. the consensus of $26.11, and revenues at $68.11B vs. the consensus of $68.20B). However, unlike Amazon, Alphabet’s news sentiment came out highly positive after its quarterly report, finishing as one of the most bullish stocks in this week’s news coverage. Here’s why:

First, even though Alphabet’s revenues came in ever-so-slightly below analysts’ estimates, they were 23% higher than the year previous, in spite of the current headwinds across the tech sector; the vast majority of these revenues came from within its Google advertising business (which includes Google Search, Youtube ads, etc.), with other considerable contributions coming from Youtube subscriptions and its Google Cloud service. The second reason for analysts’ optimism here is that the earnings miss seems likely to be a temporary phenomenon — in fact, aside from a loss of $1.2 billion in its equity investment portfolio, which CFO Ruth Porat blamed on the recent "market volatility”, Alphabet’s its operating margin remained nearly flat year over year at 30%, and its operating income actually increased 22% to $20.09 billion.

Our Thoughts:  BUY 🟩

Robinhood Inc. ($HOOD) 🪶 — BEARISH SENTIMENT🔻

this week: -94% sentiment 🔴 | -3.21% price 🔴

Mobile brokerage company Robinhood was one of the most bearish stocks on the market this week based on its sentiment expressed in news coverage (-94% on our scale from -100% to +100%), falling -11% in share price on Thursday and finishing the week down -3.21% after missing Wall Street expectations in its first-quarter earnings report. In it’s Q1 release, Robinhood announced an earnings loss of $392M (or 42 cents per share), along with a big ‘ole -43% decline in quarterly revenues to $299M (compared with $522M a year ago).

Robinhood’s declining revenues stemmed primarily from a sizable drop in its monthly active user base, which fell -10% to 15.9M last month compared to 17.7M at the same time last year, thanks in part to users with lower balances engaging “less in the current market environment” according to CEO Vlad Tenev. Outside of earnings, the bigger driver of Robinhood’s news pessimism came as the consequence of comments from Berkshire Hathaway VC Charlie Munger (aka Warren Buffett’s other half) on Saturday, in which he said he believes the company is “unraveling”, with outspoken criticism about how Robinhood lets its investors trade for “free” while making most of its money via payment-for-order flow (ie. selling customer market orders to third parties). Later on Saturday, a Robinhood spokesperson fired back at Munger in this statement to Yahoo Finance.

Our Thoughts: SELL 🟥

4. 🔭 Market Mood Outlook

Sentiment expressed in news coverage this week fell to its most bearish measurement of the past 3 months. While inflation worries remain top of the zeitgeist, they took the back seat this week as the focus shifted to corporate earnings and the deteriorating outlook for global growth.2 European activity continues to be threatened by the ongoing war in Ukraine, pandemic lockdowns in China are weighing on the country's growth, and the U.S. economic momentum is slowing. Because of these challenges, stocks revisited the lows of this year's trading range, with the S&P 500 now down about 10% and the Nasdaq 20% from their highs back in early January.

Thus, the major question on everyone’s mind remains: are we heading into recession + bear market territory? Some say that we may already be there — the NASDAQ is already in official bear market territory, and if the US’s GDP trajectory and inflation remain as bad as they are throughout the rest of the year, then a recession could be somewhat likely. Others (including Edward Jones) argue that we may be nearing the worst of these economic pressures, and — assuming consumer spending stays high after the anticipated interest rate hikes from the Fed over the coming months — what we are experiencing right now will end up being more of a “large correction” than a long-term recession.

Both views hold merit, and the answer is that it’s simply too early to say. If one thing’s for sure, we are approaching an inflection point with the major US indexes currently trading near the bottoms of their 3-month ranges, and the market’s activity over the next month will likely set the tone for the remainder of the year. Here’s a few of the key catalysts with potential to swing the market:

Key Market Movers Ahead:

1. 📋Economic Reports: a number of important economic reports and meetings are slated to take place over the next two weeks, including the Labor Department’s April jobs report on Friday, the Federal Reserve’s policy meeting on Wednesday, and the next monthly inflation reading on May 11th — all of which have serious potential to decide the market’s direction in the near term as sentiment remains fragile and volatility persists. While the jobs report is expected to show continued solid employment now that the pandemic is mostly behind us here in the US (a good sign), the Fed’s meeting is expected to conclude with the approval of another half-a-percentage point interest rate increase (its most “hawkish” increase since 2000).

2. 📊 Corporate Earnings: corporate guidance has so far provided some reassurance that S&P 500 earnings can still grow between 5% -10% this year, partly offsetting the headwind of declining valuations. Value investments and companies that benefit more from the economy returning to normal face easier comparisons and better demand trends in the short term. Once economic growth falls to a below-trend pace, possibly in 2023, leadership could once again rotate back to tech and the more growthy parts of the market. Earnings to watch for this week include $AMD, $SHOP, $PFE, $SQ, and more:

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. 😎

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