Interesting Bloomberg article this morning: ChatGPT can decode Fed speak and predict stock moves from headlines

I came across this article on Bloomberg that talks about how ChatGPT can analyze financial news and statements and generate insights and predictions for investors such as:

• Interpret the tone and sentiment of Fed officials and central bankers and gauge their policy stance
• Extract key information from earnings reports and company announcements and assess their impact on stock prices
• Generate natural language summaries of complex financial data and trends
• Answer follow-up questions, admit its mistakes, challenge incorrect premises

The article also mentions some examples of how ChatGPT performed on some recent headlines and statements, such as:

• “Fed Chair Powell says economy is at an ‘inflection point’ with stronger growth ahead”
• “Tesla reports record deliveries of 184,800 vehicles in Q1 2023”
• “GameStop announces $1 billion stock sale plan”

ChatGPT gave some interesting responses, such as:

• “Powell’s statement suggests that he is optimistic about the economic recovery and expects inflation to remain under control. This could imply that the Fed will maintain its accommodative monetary policy for longer, which could support the stock market.”
• “Tesla’s delivery numbers exceeded analysts’ expectations and showed strong demand for its electric vehicles. This could boost its revenue and profitability in the quarter and improve its competitive position in the industry. Tesla’s stock price could rise on this positive news.”
• “GameStop’s stock sale plan indicates that it is trying to take advantage of its elevated share price and raise capital to fund its turnaround strategy. However, this could also dilute existing shareholders and put downward pressure on the stock price. GameStop’s stock price could drop on this announcement.”

I think this is a fascinating application of AI and NLP to the financial domain, and I wonder how accurate and reliable ChatGPT can be in its predictions. Do you think it could be a useful tool for investors and traders?

Research papers:
Can ChatGPT Forecast Stock Price Movements?
Can ChatGPT Decipher Fedspeak?