Welcome to our weekly Market News Roundup 🗞️:

A huge shoutout to our 14 new subscribers this week, including those of you who found out about us via Beyond Market Cycles’s newsletter — thank you for being here! Here’s the 3-point agenda:

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 ahead

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Part 1: Overall News Sentiment 🖼️

• Overall news: +36% sentiment, bullish 🟢

• S&P 500 (large cap) news: +39% sentiment, bullish 🟢

• Russell 2000 (small cap) news: +67% sentiment, very bullish 🟢⭐

For the second week in a row, the mood of market news coverage was overwhelmingly optimistic last week, culminating in the longest streak of net-bullish news sentiment days since January — a pleasant change of tune vs. the gloomy sentiment of the past month. Overall, the average sentiment expressed in finance news articles last week finished at a net score of +36% (on our scale from -100% to +100%). Sentiment expressed about the Russell 2000 Index led the pack with a net score of +67% as small caps continued their rally in select spots, and sentiment about the larger-cap S&P 500 remained bullish as well at a score of +39%. This week’s mood was driven by the following topics and events:

💡1. Labor markets as a beacon of optimism:

Last week’s monthly employment report from the Bureau of Labor Statistics revealed that the US jobs market is still hot; the economy added 390,000 jobs in May, handsomely exceeding the consensus estimate of 322,000 (though slightly below April’s total of 428,000). The unemployment rate held steady at 3.6%, its best rate since the pandemic and only slightly above a half-century low.1 And as heightened conversation about the potential for a US recession persists, an important takeaway here is that no recession in the last 50 years (excluding the pandemic) has begun with an unemployment rate below 4% — however, it’s also true that there’s little room for more labor market improvement from here.

🗓️ 2. May markets’ modest finale:

After surging nearly 7% last week and snapping a 7-week downtrend, the major US stock indexes each regressed about 1% — for the Dow, it was the smallest weekly move in either direction in roughly a month. Zooming out, the major indexes actually finished slightly higher in May in the wake of April’s sell-off, with the S&P 500 and Dow both recording gains of <1%, and the Russell 2000 finishing May up nearly 2.5%. The VIX — which measures investors’ expectations of short-term market volatility — has also eased considerably since early May, trading as low as 25 on Friday (compared to its peak of nearly 35 on May 9th).2

🏠 3. Moderating mortgage rates:

Data released by mortgage giant Freddie Mac this week showed that mortgage rates in the United States dipped for a second consecutive week, slowing alongside consumer spending. The average mortgage rate on a 30-year fixed-rate mortgage fell by 15 basis points to 5.1% annual percentage rate (APR), for the week ending 26 May. The average rate for 15-year mortgages also dropped slightly to 4.31%.3 While this comes as a reassuring sign for potential homebuyers who’ve been stifled by the unprecedented rate increases of the past year, analysts suggest the decline could be short-lived as the Federal Reserve considers raising rates across the board in the coming months.

Part 2: Stocks to Watch 🔥🧊

here’s a quick look at three notable stocks to keep an eye on based on their sentiment expressed in stock market news coverage: Beyond Meat, Dell Technologies, and Plug Power

1. Beyond Meat ($BYND) 🥩 — highly bearish 🔴

this week: 🔻-51% news sentiment | 🔻-5% stock price

Plant-based meat producer Beyond Meat finished with highly bearish news sentiment this week after capping off the month of May down -28.3% in share price, skidding to an all-time low of $25.07 per share by Friday. While $BYND’s downward trend seems to be driven by its recent string of disappointing quarterly earnings reports (the most recent of which came in at a loss of $1.58 per share), it’s certainly been expedited by investors’ flight away from high-valued “growth stocks” of the like in recent months.

To add insult to injury, the Beyond Meat’s news sentiment fell further this week after being hit with two lawsuits alleging it “grossly overtates” the protein content of its products; both stating the company’s use of the terms “all-natural” and “made from plants” (which Beyond Meat no longer deploys on its website) are misleading given its heavy use of "synthetic” ingredient methylcellulose. All in all, the allegations bring Beyond Meat’s core offering into question, which ultimately bodes poorly for its stock market prospects.

2. Dell Technologies ($DELL) 🖥️ — undervalued, bullish 🟢

this week: 🔺+36% news sentiment | 🔺+1.5% stock price

On the other side of the pillow, major computer-maker Dell Technologies ended the week with highly bullish sentiment as its stock price rose 1.5% to finish the month of May up nearly 12% to $51.02 per share. Dell’s recent upward trajectory was catalyzed by its impressive fiscal Q1 2023 earnings report last week, which revealed strong revenue and profit growth over the past few months.

According to the report, Dell’s adjusted earnings per share came in at $1.84 per share (beating consensus estimates of $1.39) on sales of $26.12B, marking a 36% increase in earnings vs. the previous year. These gains were broad-based, with the company’s infrastructure solutions sales rising 16% to $9.3B, and its personal computer sales increased 17% to 15.6B. Coupled with the fact that $DELL is currently trading at an extremely cheap 2023 forward price-to-earnings ratio of 7.7, analysts suggest the stock could be a great long-term value buy with a base-case target price of $94.36/share.

3. Plug Power ($PLUG)🔌 — bullish price target 🟢

this week: 🔺+31% news sentiment | 🔺+4% stock price

After hitting a 52-week low share price of $13.45 back on May 11th, shares of hydrogen fuel cell manufacturer Plug Power climbed back +4.5% to $17.90 this week behind generally optimistic sentiment expressed in news coverage. Plug’s recent revival came as the result of an increased price target of $40 from KeyBanc’s Sophie Karp this week, implying a potential upside of 113% from its current price — a stark contrast to the stock’s downgrades from other rating agencies in previous weeks, and perhaps a shifting narrative for similar stocks.

KeyBanc also increased their price target on fellow fuel cell company Bloom Energy ($BE) this week to $30, a welcome sign for investors in renewable energy streams, especially given the price decline of such growth stocks in recent months. Plug’s news sentiment was also boosted this week by a newly announced partnership in South Korea, which the company claims will drastically increase its global footprint and lay the groundwork for additional international collaborations in the coming months.

Part 3: Market Mood™ Outlook 🔭

This week’s market news sentiment continued its climb out of the pessimistic hole of the past month, finishing with a considerably bullish net-sentiment rating of +36% overall. This rise in market mood was driven by a cluster of optimistic signals for the market and economy — namely, a solid jobs report, a better-than-expected end to the month of May for the major US stock indexes, and a slight moderation in mortgage rates.

While these drivers may be enough for us all to take a brief sigh of relief (and yes, enjoy it while you can), there’s still plenty of reason to believe that the bear market is still far from over, and the question remains: is a recession afoot? Some key points and major events to key an eye on this week:

🔈1. Recession talk abound:

If what people are saying in the news is any indication (which we believe is true), then it’s hard to rule out that the US may be on the precipice of recession. Last week, roughly 1 in 5 of all news articles mentioned the word “recession” — by far its highest frequency of discussion of any time in the past year. And while we don’t have data for how much people were talking about a recession during the short-lived pandemic recession back in 2020, it shouldn’t be taken lightly that it’s coming up in conversation as often as it is.

📈 2. More on the inflation situation:

For a better indication on what the near-future of the US economy entails, all eyes will be on inflation this week, with the Bureau of Labor Statistics slated to release its latest Consumer Price Index (CPI) this Friday for the month of May. Last month, the government reported that inflation had accelerated in April at an 8.3% annual rate (which was slightly below March’s 40-year high). The CPI will be a pivotal input into the Federal Reserve’s interest rate plan, which they are already expected to increase at their next two meetings. If the CPI comes in below last month’s 8.3% rate, then perhaps there’s hope that we’ll be able to avoid a recession with some carefully calculated steps from the Fed; otherwise, the recession seems to be increasingly likely.

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 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.