U.S. Stock Futures Rise to Start 2025

As we brush off the last bits of confetti and shake off our sleepiness, we step back into stock market activities this morning for the first time in 2025. Fortunately, it’s not just an empty landscape we see; there are fresh economic reports on weekly employment data.

Before these figures were released, the Dow Jones Industrial Average was up by 310 points, the S&P 500 climbed 45 points, and the Nasdaq increased by 205 points. This positive momentum brings hope for a recovery from a poor performance in December, in which only the Nasdaq managed to end the month slightly in the green. Meanwhile, the Dow had dropped by 4.5% and the small-cap Russell 2000 fell nearly 8% during that period.

Weekly Jobless Claims Show Positive Signs

The start of the new year brings encouraging news regarding the labor market, with Weekly Jobless Claims falling into a stable range: 211K Initial Jobless Claims were filed last week, which is below the 225K anticipated and the revised figure of 220K from the prior week. This number is also significantly lower than the 260K we observed in early October, which now seems to be an outlier.

Continuing Jobless Claims also decreased week-over-week to 1.844 million, marking the lowest level since September last year and falling below the previously revised figure of 1.896 million. We have now dropped below the 1.9 million mark again; in the past few months, we saw long-term jobless claims at or above this threshold, only for the numbers to be revised lower in subsequent weeks, with the first half of November being the only time above this figure.

It’s important to note that these jobless claims data are influenced by the holiday season. With many people taking vacation days and employers delaying layoffs until after the New Year, it might take a couple of weeks before we receive a clearer picture of the employment landscape. It's important to remember that these levels are higher compared to the lows we experienced with jobless claims a couple of years ago, and it remains uncertain when we might return to those earlier figures, if at all.

Tesla Reports Decline in Yearly Deliveries

A significant update arrived just before today’s market opening: Tesla (TSLA - Free Report) announced that its vehicle delivery numbers fell short of expectations. The company reported delivering 495,570 vehicles, which is lower than the 504,770 anticipated. For the first time since the auto industry received a bailout from the U.S. government, Tesla's delivery figures for 2024 are less than those in 2023.

The stock dropped by 3% following this announcement, but this is not concerning for most TSLA investors this morning. The stock has rallied 13% over the past month, and it remains up 55% since the General Election in November. Given CEO Elon Musk's significant influence on the incoming administration, it is likely that Tesla’s performance will be driven by larger factors beyond just vehicle delivery numbers.

Future Market Outlook

Looking ahead, the stock market is facing some changes with an incoming Trump administration, which many analysts believe could differ from the previous one experienced eight years ago. There are genuine concerns about how potential tariffs and immigration policies may impact the overall economy.

In the shorter term, next week will be Jobs Week, which is crucial for investors and the Federal Reserve as they assess monetary policy going forward. Last month, we witnessed job gains exceeding 200K while the unemployment rate remained steady at a manageable 4.2%. If these strong trends continue into the following month, it is likely that the Fed will maintain interest rates in the range of 4.25-4.50% instead of reducing them further.

However, if we start to see a significant decline in employment numbers, the Federal Reserve may need to adjust its perspective on interest rates, as supporting full employment is a vital part of its dual mandate. Notably, while November showed robust job growth at +227K, October featured a disappointing addition of only +36K jobs, primarily due to hurricane fallout.

Stocks, Economy, Market