New Year, New Market Trends
As the first trading day of 2025 kicked off, Wall Street returned from its holiday break with a mixed bag of results. The S&P 500 (^GSPC) slipped 0.2% after opening strong, while the Dow Jones Industrial Average (^DJI) shed 0.3%, or 150 points. The tech-heavy Nasdaq Composite (^IXIC) fell less than 0.2%.
Tesla Takes a Hit
Tesla (TSLA) shares plummeted almost 6% after the electric vehicle maker reported its first annual decline in deliveries. The company delivered 495,930 vehicles globally in the fourth quarter, missing analyst estimates. This news was compounded by a tragic incident involving a Cybertruck loaded with fireworks and fuel canisters, which exploded in Las Vegas, killing one person.
Apple Discounts iPhones in China
Apple (AAPL) shares fell more than 2.5% after the iPhone maker offered rare price discounts on its latest models in China. This move reflects rising competition from local device makers.
Mortgage Rates Reach Highest Level Since July
US mortgage rates rose to 6.97% over the holiday week, reaching the highest level since early July. This increase weighed on applications for home purchases and refinancing, according to the Mortgage Bankers Association.
Weekly Jobless Claims Fall to Lowest Level Since April
Data released by the Department of Labor showed weekly jobless claims fell to 211,000, a decrease from the previous week’s upwardly revised level of 220,000.
Bond Yields and US Dollar Index Rise
Bond yields and the US Dollar Index (DX-Y.NYB) continued to march higher on Thursday. The 10-year Treasury yield was up about 2 basis points to hover around 4.57%. Meanwhile, the US Dollar Index rose above 109, hitting its highest level since November 2022.
Market Strategists Bullish on S&P 500
Many market strategists are optimistic about further gains for the S&P 500 (^GSPC) in 2025. However, one signal is close to indicating it’s time to sell. Bank of America’s Sell Side Indicator (SSI) moved up to 57% in December, just one percentage point shy of the “sell” signal.
Consumer Discretionary Sector Lags
The Consumer Discretionary (XLY) sector was the biggest laggard in the S&P 500 on Thursday, falling more than 1.5% as a 6% drop in Tesla (TSLA) weighed down the sector.
US Dollar Strength Could Impact Stocks
A potential headwind for US stocks is on the rise. The US dollar index rose above 109 on Thursday, hitting its highest level since November 2022. An increasingly strong US dollar could serve as a headwind for stocks, particularly for companies with large international exposure.
Debt Ceiling Debate Looms
A new debt ceiling was established this week, setting up a debate for the months ahead about averting a government default. The parameters of that coming standoff are already making President-elect Donald Trump unhappy.
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