Summary of News versus Sentiment

Predicting Stock Returns from News Stories

Federal Reserve Board,

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News versus Sentiment summary
Artificial intelligence and algorithms may inform the future of stock picking.


8 Overall

8 Importance

10 Innovation

6 Style


Algorithms have been buying and selling stocks for some time now, and in the past few years, as many media outlets look for cost savings, algorithms have also begun writing news stories. So the time may be right for artificial intelligence to take over the management of investments, sending the multitrillion-dollar investment industry into a paradigm shift. An intriguing new paper from economists Steven L. Heston and Nitish R. Sinha demonstrates that artificial intelligence and algorithms can successfully make share price predictions using news stories. getAbstract recommends this thought-provoking but highly technical description of novel research on news sentiment analysis and stock prices.

In this summary, you will learn

  • How news can predict future stock price movements,
  • Why no news is not necessarily good news, and
  • Whether positive and negative news are equally effective at moving prices.


Artificial intelligence and textual analysis now play important roles in finance and markets. While academic research has lagged behind commercial applications, a growing body of work shows that “neural networks” – systems that can assess the interactions of various functions, much as a biological central...
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About the Authors

Steven L. Heston is a professor of finance at the University of Maryland. Nitish R. Sinha is an economist at the Board of Governors of the Federal Reserve System.

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