Stock Market Sees Strong Start to 2025
As the calendar flips to a new year, the US stock market is off to a promising start. The S&P 500 is on track to break its four-day losing streak, rising 0.8% in morning trading. The Dow Jones Industrial Average is up 317 points, or 0.7%, while the Nasdaq composite has gained 0.9%.
Small Stocks Lead the Way
Stocks of smaller companies are driving the market’s gains, often a sign of rising optimism about the US economy’s strength. The Russell 2000 index of small stocks has surged 1.3% after a report showed fewer US workers applied for unemployment benefits last week than expected. This latest signal suggests the job market remains remarkably solid despite high interest rates.
Big Tech Stocks Shine
Big Tech stocks, which have led Wall Street for most of the last few years, are also at the forefront of the market’s gains. Nvidia, a leader in artificial-intelligence technology, has risen 2.4% after a remarkable 2023 and 2024. Many investors and analysts believe the AI rush will continue, although some critics argue that prices for some stocks have risen too quickly.
Caution Amid Optimism
While optimism abounds, some contrarians are feeling nervous. A measure of Wall Street analysts’ stock recommendations is at its highest level since early 2022, according to Bank of America strategist Savita Subramanian. This indicator has been reliable in the past, and it’s close to triggering a signal for contrarians to sell.
Tesla Slumps
One notable exception to the market’s gains is Tesla, which slumped 4% after disclosing it delivered fewer vehicles in the last three months of 2024 than analysts expected.
Bond Market Eases
In the bond market, Treasury yields have eased, taking some pressure off the stock market. The yield on the 10-year Treasury has slipped to 4.55% from 4.57% late Tuesday.
Global Economic Data Mixed
Economic data from China has been less encouraging, with stock indexes falling 2.2% in Hong Kong and 2.7% in Shanghai. A survey of factory managers showed activity expanding at a slower pace in December, with new orders, employment, and business sentiment weakening. Meanwhile, stock indexes were mixed elsewhere in Asia and Europe.
Commodity Prices Rally
Commodity prices have rallied, with crude oil and natural gas rising at least 2%. Gold has gained 0.7% to $2,660.70 per ounce.
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