MARKET RECAP

Yesterday: Stocks fell Tuesday as markets awaited the Fed’s rate decision, with the Dow extending its nine-day slide. Bond yields edged up to 4.4%, while oil dropped on weak China retail data. Investors now turn to inflation signals and the Fed’s next move.

On Our Radar: After analyzing this morning’s housing starts and building permits data, the next major report (besides the rate policy) will be tomorrow’s release of initial jobless claims. On the earnings front, Micron will post its quarterly results after the closing bell.

TOP STORY

Stocks Slip As Strong November Retail Sales Raise Concerns Over 2025 Fed Rate Cuts

November’s retail sales came in hotter than expected, sparking fears that the Fed may hit pause on 2025 rate cuts. Consumer spending remained strong, led by autos and online shopping, while chip stocks slipped on renewed tensions with China.

Here’s what this shift means for markets — and how investors can prepare for what’s next.

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FIVE ZINGERS

Holiday Bliss: While investors fretted about inflation implications, November’s robust retail report signaled strong holiday demand. Discover the product categories that have attracted the most gains.

Auto Alliance: Japanese automotive giants Nissan and Honda are reportedly negotiating a merger to consolidate under a holding company. Learn why Tesla and Chinese EV manufacturers may have forced the issue.

Crude Awakening: Although the market overall has enjoyed a strong performance this year, the same can’t be said for hydrocarbon energy players like ConocoPhillips, which slipped on Tuesday. Read why one country’s woes may be hurting demand.

Space Walk: Rocket Lab successfully delivered its second Pioneer spacecraft to Vandenberg Space Force Base. Here’s how the company is setting a fresh benchmark for reliable satellite production.

Pulling Back: Easily one of the strongest performers this year, SoundHound AI has soared to incredible heights thanks to its conversational AI tech. However, SOUN stock appears to be taking a breather after pricing in a range of positive news.

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Under the Radar: Exploring Untapped Potential in Overlooked Stocks

Editor’s Note: Every week, Benzinga Edge members receive the Insider Report. It’s a rundown of what to expect from the markets in the week to come, which sectors are outperforming and why, and most importantly, a selection of hand-picked stocks that are poised to move up because of that week’s trends. Here’s a sneak peek:

As a rule, I pay almost no attention to Wall Street analysts. I do not give much of a whoop about their opinion of a stock. Most of my biggest winners have been underfollowed or not followed by mainstream Wall Street firms. Much of the research produced for individual investors by the big Wall Street firms is more marketing than research. There are a few boutique analysts that specialize in things like banking and real estate that I read regularly, but it’s more to look for inside baseball information I may have missed and take advantage of their access to the C-suite.

What I do pay attention to are earnings surprises and revisions. When analysts revise earnings estimates upward, it’s like waving a green flag to investors. Positive revisions often signal that a company’s fundamentals are improving and that management is executing well. This can set the stage for strong stock performance, especially for patient, value-focused investors who know how to spot opportunities early.

Market sentiment plays a big role here. A positive revision often sparks optimism, driving buying activity. This momentum can push the stock price higher as more investors jump on board. Institutions, in particular, pay close attention to these revisions, and their large-scale buying can amplify the effect.

Valuation is another key factor. Higher earnings expectations make stocks look cheaper on a price-to-earnings basis, even if the price hasn’t moved yet. That’s an open invitation for investors to re-rate the stock higher. Over time, consistent upward revisions can create a narrative of reliability and growth, attracting long-term capital and putting a solid floor under the stock price.

To keep reading and to find out how investors can prepare for the coming oil price rollercoaster, sign up for Benzinga Edge here.

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