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JPMorgan Unveils ChatGPT AI Model to Predict Stock Market Moves on Fed Statements

2 mins
Updated by Kyle Baird
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In Brief

  • JPMorgan Chase revealed a new AI model that predicts stock market movements based on Federal Reserve statements.
  • The new model uses what is called a Hawk-Dove score.
  • Banks and tech companies are both interested in the applications of AI.
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JPMorgan Chase has unveiled a new AI model that predicts stock market movements based on Federal Reserve statements. The bank terms the scale used as the Hawk-Dove score.

Multinational financial services company JPMorgan Chase has unveiled a new AI model that can predict stock market movement from statements made by the Federal Reserve.

The tool uses ChatGPT to interpret statements made by the Federal Reserve, a use case that is becoming increasingly popular.

JPMorgan Chase Working on Several AI Use Cases

The tool is a ChatGPT-based language model to rank the effect that they might have on stock movements. The investment bank deems this is the Hawk-Dove Score. Joseph Lupton, an economist at the bank, said, “preliminary applications are encouraging.”

For example, the model showed “an increase in hawkishness among Fed speakers between meetings, the next policy statement has gotten more hawkish, and yields on one-year government bonds advanced.”

An increase of 10 points on the scale is the equivalent of an increase of 10 percentage points in the probability of a 25 basis point hike at the central bank’s next policy meeting. Over the next few months, this model will be used for more than 30 central banks.

Hawk-Dove Ranking Federal Reserve | FT
Hawk-Dove Ranking Federal Reserve | FT

JPMorgan Chase has not been shy to use technology in its business. AI, in particular, has been something that the bank has been looking at, with over 300 use cases reportedly in production. CEO Jamie Dimon has said that the technology is groundbreaking.

ChatGPT has been responsible for this massive push into AI-powered products. On JPMorgan Chase’s part, it is spending over $2 billion on building cloud-based data centers.

Dropbox Cuts Workforce to Focus on AI-Powered Products

Many tech companies have made AI a major part of their growth strategies. The latest to join this throng is Dropbox, which is cutting 16% of its workforce to hire talent for AI-powered products. The company has shifted some of its employees to focus on this new strategy and is keen on delivering new products to drive revenue up.

As the interest in AI has been moving, several prominent individuals and entities have been calling for regulation. This includes Elon Musk, John Legend, and the Chinese government. Musk, who stepped down from OpenAI’s board, has criticized the pace of AI development. Meanwhile, Legend is concerned about the ramifications of AI-generated music.

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Rahul Nambiampurath
Rahul Nambiampurath's cryptocurrency journey first began in 2014 when he stumbled upon Satoshi's Bitcoin whitepaper. With a bachelor's degree in Commerce and an MBA in Finance from Sikkim Manipal University, he was among the few that first recognized the sheer untapped potential of decentralized technologies. Since then, he has helped DeFi platforms like Balancer and Sidus Heroes — a web3 metaverse — as well as CEXs like Bitso (Mexico's biggest) and Overbit to reach new heights with his...
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