Financial news articles can be a good short-term indicator of why the U.S. stock market is doing well or poorly, finds a new working paper, “Business News and Business Cycles,” from the National Bureau of Economic Research.
Based on a full-text analysis of 763,887 Wall Street Journal articles published from 1984 to 2017, the authors find that news coverage of particular topics, like signs of a looming recession, predicts 25% of average fluctuations in stock market returns.
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