U.S. Stock Futures Rise to Start 2025

This morning marks our first foray back into the stock market as we begin the year 2025. The landscape is looking promising, especially with fresh economic updates related to weekly employment data.

Before these updates came in, the Dow Jones Industrial Average climbed by 310 points, the S&P 500 rose by 45 points, and the Nasdaq gained 205 points. This positive start is a hopeful signal after a challenging December, in which only the Nasdaq managed to finish slightly in the green. The Dow fell by 4.5% last month, while the small-cap Russell 2000 experienced a significant drop of nearly 8%.

Weekly Jobless Claims Show Positive Signs

Starting the new year, the initial jobless claims figure presents good news regarding the labor market. Last week, the Initial Jobless Claims reported at 211,000, which is lower than the anticipated 225,000 and slightly less than the revised figure of 220,000 from the previous week. This marks a substantial decrease compared to the peak of 260,000 claims seen in early October, which increasingly appears to be an outlier.

Meanwhile, Continuing Jobless Claims saw a decrease as well, now at 1.844 million, the lowest level since September of last year. This decline is significant when compared to the downwardly revised figure of 1.896 million from the week before. Once again, the count has dipped below the 1.9 million mark, a threshold breached several times in recent months only to later be revised lower. Notably, only the first part of November had a week where claims exceeded this value.

It’s essential to consider that these jobless claims figures fall within the year-end holiday season. With many individuals taking vacation days and various companies holding off on making staffing decisions, we might need a couple more weeks to get a clearer picture of ongoing employment trends. It's also worth noting that jobless claims are significantly higher than the lows recorded a couple of years back, and the timeline for returning to those levels remains uncertain.

Tesla Faces Decline in Deliveries

In a recent announcement just before the market opened today, Tesla (TSLA - Free Report) revealed that its vehicle deliveries fell short of market expectations. Tesla delivered a total of 495,570 vehicles, which was below the anticipated 504,770. This marks the first time Tesla’s 2024 delivery numbers have lagged behind those from 2023 since the U.S. auto industry underwent a government bailout.

Following this announcement, Tesla shares saw a decline of 3%. However, this dip may not overly concern most TSLA shareholders, as the stock has risen 13% over the past month and an impressive 55% since the General Election in November. Given CEO Elon Musk's significant influence on the current administration, Tesla’s performance may be swayed by broader issues beyond just vehicle delivery statistics.

Looking Ahead in the Stock Market

In the larger context, the market is anticipating changes under the upcoming Trump administration, which many analysts believe will differ somewhat from Trump's first term. There are genuine questions regarding how issues such as tariffs and immigration policies may impact the overall economy.

In the short term, next week is designated as Jobs Week, which will provide crucial data for market participants and the Federal Reserve in terms of future monetary policy. Last month, job gains exceeded 200,000, with the unemployment rate resting at a still manageable 4.2%. If these robust numbers continue into the next month, it’s likely that the Fed will opt to maintain interest rates between 4.25% and 4.50%, rather than making further cuts.

Conversely, if we start to see a notable decline in employment levels, this could shift the Fed's perspective regarding interest rates. Notably, one half of the Fed's dual mandate centers around supporting full employment. While November showcased an impressive addition of 227,000 jobs, it's essential to remember that October – affected by hurricanes – only accounted for 36,000 jobs the entire month.

stocks, economy, employment