Hey folks, welcome to this week’s Market News Roundup 🗞️ — a special shoutout to the 117 new subscribers who joined our mailing list this week! 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: +10% sentiment, bullish🟢

• S&P 500 (large cap) news: +10% sentiment, bullish🟢

• Russell 2000 (small cap) news: -25% sentiment, bearish🔴

🧗 Stocks: market climbs back to end the week on a high note

• The major stock indexes started last week and ended it with sizable daily rallies, rebounding from the previous week’s mostly negative results. The S&P 500, the NASDAQ, and the Dow all finished with weekly gains of around 5% as investors focused on a big slate of 3rd-quarter corporate earnings reports and prospects for further interest-rate increases.1

🏌️ Earnings season in full swing

• The subdued expectations for earnings season improved slightly as a second week’s batch of quarterly results came in. As of Friday, Q3 net income was expected to rise 1.5% compared with the same period a year earlier, based on S&P 500 companies that have already reported combined with projections for those still scheduled to report. In the previous week, analysts had forecast growth of 1.3%.

🏠 Housing market’s slowdown

• New data this week revealed that US home sales in September fell for the eighth month in a row. Rising mortgage rates are one reason for the slowdown; the firm Freddie Mac reported on Thursday that the average 30-year fixed-rate mortgage rose to a rate of 6.94%, up from 6.92% the previous week and more than double the 3.09% figure from a year earlier.

• Meanwhile, the Wells Fargo US Housing Market Index fell for the 10th straight month, and is now sitting at its lowest level since 2020:

📰 Other noteworthy headlines:

• UK Prime Minister Liz Truss steps down after only 45 days on the job

• 10-year US Treasury bond yields hit 4.20% on Friday, its highest levels since 2008

• Last week’s US unemployment benefits data showed 214,000 initial jobless claims — down from the previous week’s 226,000 and close to a historical low

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:

Twitter (TWTR) 📲 bearish sentiment 🔴

this week: 🔻-96% news sentiment | 🔻-1.2% stock price | view news profile 📰

Twitter ended last week as the most bearish stock on the market in terms of sentiment expressed in stock market news coverage, driven by conversation surrounding Elon Musk’s upcoming $44B buyout of the company. The deal is expected to close this week, no later than the court-ordered October 28th deadline -- though some analysts speculate that this deadline could be postponed by a national security review from the US government regarding some of the deal’s foreign investors.

When the deal does go through, Musk is expected to overhaul the company’s organizational structure, which he said could entail cutting its current workforce by more than 75% in an effort to reduce overhead. While analysts seem to agree that the company has been due for some job cuts for some time now (compared to other social media companies, Twitter has outsized staffing expenses relative to its revenues), some worry that such a drastic workforce reduction could lead to adverse content moderation and even interim security risks for Twitter’s 200M daily active users.

Twitter is also expected to release its Q3 earnings report on Tuesday of this week, and judging from Snap's recent decline on slowing ad sales, we might expect to see similar declining revenues from Twitter. If this comes to fruition, Wednesday could make for a solid swing opportunity ahead of Elon's expected close on Thursday.

top Twitter articles this week:

Netflix (NFLX) 🍿 bullish sentiment 🟢

this week: 🔺+71% news sentiment | 🔺+23% stock price | view news profile 📰

Netflix’s stock was anything but chill this week — the streaming giant finished with some of the most optimistic news sentiment on Wall Street and jumped +23% in stock price after reporting a powerful Q3 earnings report on Tuesday. During the call, Netflix reported quarterly growth of +2.4M new subscribers, more than doubling expectations and snapping the disconcerting streak of shrinking subscribers from its previous two reports. Following suit, Netflix reported growing quarterly revenues of $7.9B (vs. $7.8B expected) with earnings per share of $3.10 (vs. $2.40 expected).

Perhaps the most encouraging piece for Netflix this week was news about its plans to shake up its US product offering: first, the company announced last week that it will release a lower-cost advertising-supported tier, which debuts in the US on November 3rd at $6.99 per month. Second, Netflix announced it will finally do away with free password sharing for good in the near future; instead, subscribers will need to pay to add sub-accounts going forward. While the ad-tier subscription is a clear effort to expand its user base, the sharing restrictions will serve to extract more revenue from its existing subscribers — both pieces have been a long time coming, especially as Netflix fights to retain share in the increasingly competitive streaming space (keep in mind, Disney surpassed Netflix as the market leader in July). More on Netflix’s future prospects below:

top Netflix articles this week:

III. Market Mood™ Outlook 🔭

With the market’s rally this past week, stock market news coverage eeked out a bullish sentiment rating for the first time in the past month — driven by a combination of third-quarter earnings reports meeting & beating expectations, declining housing prices, and another solid weekly unemployment report. While this week’s market performance was a nice sign of life, it seems we’re still in need of a few important conditions before we can expect the broader bear market to bottom. Some upcoming events and things to keep an eye on:

government’s initial Q3 GDP estimate:

• The scheduled release on Thursday of the government’s initial estimate of third-quarter GDP will show whether positive growth returned after two consecutive quarters of economic contraction — a result that met the technical definition of a recession. In the second quarter, GDP declined at an annual rate of 0.6%; in the first quarter, the decline was 1.6%.

consumer price check ahead:

• A report scheduled to be released on Friday will be closely watched for any signs that U.S. inflation might edge downward anytime soon. The government will update its Personal Consumption Expenditures Price Index, the Fed’s preferred gauge for tracking inflation. The most recent monthly report showed that PCE inflation excluding food and energy prices rose 4.9% in August from a year earlier, up from 4.7% the previous month.

continued corporate earnings season:

• Another gargantuan week of corporate earnings is on the horizon, with big names Microsoft , Apple , McDonalds , ExxonMobil , Ford , Visa and the like expected to release quarterly reports this week.

Overall, these three temperature gauges will set the stage for how the Federal Reserve chooses to control interest rates at its upcoming meeting, which is perhaps the most important indicator in itself of whether or not the US will continue on its treacherous path into a full-out recession. Given the current rate hike trajectory (justified by the Fed’s stance of avoiding a “Lost Decade”) any deviance or pivot back towards lowering interest rates will be the sign to keep an eye on; though I’m not expecting to see anything of the sort until at least early 2023.

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: