U.S. Stocks Expected to Open Higher in 2025: Analysts Predict a Rebound After Year-End Dip

U.S. stock futures increased on Thursday, marking the first trading day of 2025, following a decline on New Year's Eve. In premarket trading, all four major index futures saw gains.

The S&P 500 index fell for the fourth consecutive session on Tuesday, which is the longest losing streak to end the year since 1966. Despite this missed opportunity for the traditional year-end Santa Rally, the S&P 500 still recorded a remarkable gain of over 20% for 2024, making it the second consecutive year with such strong performance.

Currently, the 10-year Treasury note has a yield of 4.53%, while the two-year note stands at 4.21%. According to the CME Group’s FedWatch tool, there is an 88.8% chance that interest rates will remain unchanged at the upcoming Federal Open Market Committee (FOMC) meeting scheduled for January 31.

Futures	Change (+/-)
Nasdaq 100	0.74%
S&P 500	0.56%
Dow Jones	0.45%
Russell 2000	0.55%

During Thursday's premarket session, the SPDR S&P 500 ETF Trust (SPY) climbed by 0.66% to reach $589.97, while the Invesco QQQ Trust ETF (QQQ) rose by 0.83% to $515.48, as reported by market analytics.

Last Session Overview

U.S. stocks closed lower on Tuesday, with the Nasdaq Composite notably dropping around 176 points. Despite this decline on the last trading day of 2024, the major indices still posted robust yearly gains. The S&P 500 had a substantial increase of 24.01% in 2024, building on its impressive growth of 24.2% in 2023. The Dow Jones Industrial Average registered a notable gain of 12.80%, while the Nasdaq Composite had the highest performance, climbing 30.78% year-over-year.

Among the standout performers, Nvidia Corp. (NVDA) saw its stock price soar by an impressive 178.78% over the year, reaching fresh all-time highs.

On the data front, the S&P CoreLogic Case-Shiller home price index showed a year-over-year increase of 4.2% in October, slightly down from a 4.6% rise in September, aligning with market forecasts. The FHFA house price index registered a modest increase of 0.4%, slightly below expectations, while the Dallas Fed general business activity index for Texas’ service sector dipped to 9.6 in December.

Sector performance during the last session was mixed, with gains led by energy, materials, and real estate, whereas consumer discretionary and information technology stocks ended the day in negative territory.

Index	Performance (+/-)	Value
Nasdaq Composite	-0.90%	19,310.79
S&P 500	-0.43%	5,881.63
Dow Jones	-0.07%	42,544.22
Russell 2000	0.11%	2,230.16

Analyst Insights

Although the S&P 500 index set numerous records in 2024, it did not enjoy a rally over the last four days of the year. History suggests that when the index declines for at least three consecutive days towards year-end, it often sees positive returns in the succeeding days. The index recorded 57 all-time highs and experienced over 20% gains in consecutive years. Over the last two years, the index surged by 53.2%, marking the highest two-year growth since 1997-1998.

After the four-day losing streak at the end of 2024, analysts are observing trends from 1966 when a similar situation led to a remarkable 7.82% increase in January 1967 following the downturn.

With the current trend of a red day on the last trading of 2024, experts are drawing parallels. "If the S&P 500 closes lower today, it would conclude four consecutive days of decline to end the year, reminiscent of 1966's market movements," stated Ryan Detrick, chief market strategist at Carson Research.

The U.S. stock market has expanded significantly, reaching a striking valuation of $63.8 trillion, representing a doubling of market capitalization in just 4.5 years. In 2024, the market added an impressive $10 trillion. To put this in context, the combined market capitalization of China, Hong Kong, and Europe equals about half that of the U.S. Additionally, the market capitalization of leading tech companies exceeds that of the entire European market, highlighting their enormous influence.

Key highlights in the asset class performances for 2024 included Bitcoin, U.S. stocks, and gold, while oil and U.S. bonds produced mostly flat returns.

Upcoming Economic Data

Several important data releases are expected this week, which will influence investor decisions.

• On Thursday, initial jobless claims as of December 28 will be published at 8:30 a.m. ET.

• Construction spending data for November will be released at 10:00 a.m. ET.

• On Friday, ISM manufacturing data for December will be available at 10:00 a.m. ET.

Stocks to Watch

• Tesla Inc. (TSLA) was up 1.32% following Elon Musk's clarification that a recent car explosion outside the Trump International Hotel in Las Vegas had no connection to the Cybertruck.

• SoFi Technologies Inc. (SOFI) faced a 2.40% decline after being downgraded by Keefe, Bruyette, and Woods due to concerns over its high valuation.

• Sealsq Corp. (LAES) rose 18.7% in premarket trading after announcing a robust cash position expected to exceed $85 million by January 3, 2025.

• Faraday Future Intelligent Electric Inc. (FFIE) gained 16.46% after announcing a delivery ceremony for the first "FF 91" 2.0 Futurist Alliance EV of 2025.

• MicroCloud Hologram Inc. (HOLO) surged 19.70% following advancements in quantum technology.

• Quantum-Si Inc. (QSI) saw a 6.67% increase after a significant share sale by a director.

Global Markets Overview

Crude oil futures have also seen an uptick of 1.41%, trading at approximately $72.73 per barrel. The gold spot index rose by 0.50%, reaching $2,654.31 per ounce, while the Dollar Index increased by 0.12% to a level of 108.612.

In global markets, Asian indexes showed mixed results on Thursday, with Japan’s Nikkei 225, South Korea’s Kospi, China’s CSI 300, and Hong Kong’s Hang Seng index all experiencing declines, while Australia’s ASX 200 index ended on a positive note. European markets reflected a similar mixed performance.

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