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Published: May 31, 2023 4 min read

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Can social media chatter predict stock market returns?

A recent research paper from four economists at the Federal Reserve says yes.

Using data from 4.4 million tweets posted since 2007, the researchers created the Twitter Financial Sentiment Index to track sentiment — whether users are feeling positively or negatively about financial conditions — on the social media network. They found that the tone of tweets overnight (between the hours of 4 p.m. and 9 a.m. Eastern Standard Time) could be used to forecast the S&P 500 index’s returns the following day.