RJ Hamster
The Rally May Live or Die Next Week
 EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!Hello Peter Anthony Hovis,The Rally May Live or Die Next WeekAfter Monday’s volatile session, Wall Street recovered slightly on Tuesday with Bitcoin’s big jump of about 6.5% a day after plunging to as low as $84,000 in its worst day since March.The S&P 500 rose 0.3%, while the tech-heavy Nasdaq jumped about 0.6%. The Dow Jones Industrial Average also finished the day in the green, with a 0.4% gain.For now, investors are laser-focused on the Federal Reserve’s upcoming meeting. Fed officials are expected to cut interest rates next week, with markets pricing in an 87% probability of a cut on Dec. 10.The market’s short-term fate will likely depend on the Fed’s comments after its meeting. Will they sound hawkish? Do they expect to cut interest rates in January? The current consensus is for the Fed to cut two to three times in 2026 — on top of the upcoming cut this month. (Photo: Shutterstock)Goldman Sachs forecasts roughly two cuts in 2026 (March and June), while futures are pricing in three cuts next year. The Fed’s latest dot plot from September indicated a median projection of just one cut in 2026, assuming that they will cut next week.The current rally depends on future rate cuts, so Fed Chair Jerome Powell’s comments might carry an enormous weight in the market’s short-term direction.The fact that the Russell 2000 (an index of small-cap stocks) declined yesterday, despite three major benchmark indexes being in the green, may suggest a lingering hesitation among investors to fully embrace the “soft landing” narrative for the broader economy.For example, consumer staples giant Procter & Gamble slipped 1.1% after CFO Andre Schulten described the U.S. consumer landscape as “volatile.”  When a company that sells essential household goods flags volatility, it suggests that consumers are trading down or rationing usage, behaviors typically associated with economic stress.So, investors may prefer the safety of large-cap balance sheets and secular growth themes at this moment.At the same time, the S&P 500 is projected to accelerate its earnings growth to 13% next year. President Trump’s stimulus package is set to kick in, as well. The catalysts might be enough for traders to turn bullish if the Fed can provide the right environment.At Piper Sandler, Craig Johnson says more time and technical evidence are needed for a “buy” signal to occur.Bitcoin topped $90,000, recovering from a bruising selloff that caught the market off guard and erased nearly $1 billion in fresh leveraged bets.As traders awaited the last few economic reports before next week’s Federal Reserve decision, President Donald Trump said he plans to announce his selection to lead the central bank in early 2026.The S&P 500 rose to around 6,830. The Nasdaq 100 climbed almost 1%. The yield on 10-year Treasuries was little changed at 4.08%. The dollar wavered.Anyone looking to bet against US stocks this month would be wise to consider the strength of the American economy and ongoing enthusiasm around artificial intelligence.That’s the view at 22V Research, where strategists say an increase in consumer spending and investments in AI are likely to support productivity, allowing firms to deliver the profits needed to power stocks higher.“Being short here requires high confidence in a much weaker economic backdrop or a significant change in the outlook for AI capex,” according to strategists led by Dennis Debusschere.While the S&P 500 recently managed to notch its longest monthly winning streak since 2021, the rally from April’s bottom has faced investor concerns around artificial-intelligence valuations and doubts around Fed rate cuts.After cutting interest rates by more than a percentage point, Fed officials are now wondering where to stop – and finding there’s more disagreement than ever.In the past year or so, prescriptions for where rates should end up have diverged by the most since at least 2012, when US central bankers started publishing their estimates. That’s feeding into an unusually public split over whether to deliver another cut next week, and what comes after that.“Nothing is going to change our view that the Fed eases next week, but it is looking more like a hawkish cut,” said Andrew Brenner at NatAlliance Securities. “We can see at least three dissents next week.”Money markets show traders are pricing in nearly four quarter-point Fed reductions over the next year, including one on Dec. 10.“If the Fed doesn’t deliver as many cuts, there’s some normalization” in Treasury yields, said Jay Barry, JPMorgan’s head of global rates strategy, at a media briefing. The US economy “bends but doesn’t break,” he added.The Quiet Internet Giant Turning Millions of Searches Into a Profit EngineToday’s Stock Pick: NerdWallet, Inc. (NRDS)NerdWallet is a big player on the internet, as you will probably land on one of its articles for any search related to personal finance.The company is trying to solve this problem:“Trustworthy financial guidance is hard to find.”So, its mission is to “provide clarity for all of life’s financial decisions.”The company has grown beyond informative articles. It offers tools, comparisons, financial offerings, and real-time insights. (Source: NerdWallet)Notably, the company has been acquiring companies to expand its services, including Fundera, On the Barrelhead, and Next Door Lending.  (Source: NerdWallet)Take Next Door Lending, for example.Before the acquisition, NerdWallet offered just a mortgage marketplace. Users would search for information on mortgages, and they can find quotes on NerdWallet’s platform. Eventually, they are referred to financial institutions.With the acquisition, NerdWallet can offer mortgages directly to its users through Next Door Lending.Plus, its mortgage customer base can refinance with the company.  (Source: NerdWallet)This is an example of how an acquisition can grow the company’s earnings. It is a perfect complement. NerdWallet is a lead-generation machine, and it can start turning them into customers through direct offerings.Sure enough, the company expanded its business to include credit cards, loans, SMB products, insurance, and emerging verticals.  (Source: NerdWallet)All of this led to a 25% revenue CAGR from 2019 to 2024.Lately, revenue growth has slowed to 12%. The financial industry is going through a sluggish cycle. For example, credit cards plunged 25% year-over-year. NerdWallet was able to grow anyway. The third quarter delivered a 12% year-over-year revenue growth.  (Source: NerdWallet)More importantly, the company has been cutting costs to accelerate its earnings growth. Cost of revenue decreased 13% year-over-year. Sales & marketing as a percentage of revenue declined from 67% to 63%.  (Source: NerdWallet)As a result, adjusted EBITDA surged from $27 million to $108 million from 2021 to 2024.NerdWallet expects even bigger EBITDA growth in 2026, going from ~$110 million this year to $140+ million.That’d be about 27% adjusted EBITDA growth.  (Source: NerdWallet)As for the mid- to long-term targets, NerdWallet plans to grow 15% to 20% compounded annual revenue.  (Source: NerdWallet)Bottom line: NerdWallet’s future looks bright with its ability to expand its business through acquisitions, and it is poised to accelerate earnings growth through efficiencies. Its P/E ratio? Just 17. This is a good growth/value stock. FILL OUT OUR CUSTOMER SATISFACTION SURVEY  © All Rights Reserved, Trade AllianceUnsubscribe | Manage Preferences |
