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Wall Street’s main indexes rose in the first trading session of 2025 as investors pinned their hopes on a fresh political landscape and more interest rate cuts, but Tesla made limited gains on the Nasdaq after a dour deliveries report.
At 09:56 a.m. ET, the Dow Jones Industrial Average rose 339.67 points, or 0.80 percent, to 42,885.17, the S&P 500 gained 43.93 points, or 0.75 percent, to 5,925.56 and the Nasdaq Composite gained 158.61 points, or 0.82 percent, to 19,469.40.
An index tracking small-cap stocks also rose 1.4 percent.
Eight out of the 11 S&P 500 sectors advanced, led by energy stocks, while real estate dipped 0.1 percent.
Tesla down 3.6 percent, touched an over three-week low after reporting its first fall in annual deliveries, missing CEO Elon Musk’s promise of slight growth in 2024, as incentives failed to stem a decline in demand for its aging line-up of electric vehicles.
“You have to put the perspective of the total deliveries in total production against the fact that this is a stock that has had just an amazing performance in 2024,” said Art Hogan, chief market strategist at B Riley Wealth.
“Post-election, any modicum of disappointing news might have an outsized impact on the stock’s price.”
The stock had soared after the US election given Musk’s close ties with President-elect Donald Trump.
Among the first datasets of 2025, a Labor Department report showed jobless claims unexpectedly fell last week, consistent with a healthy labor market. Separately, a final estimate of S&P Global’s manufacturing survey showed activity stood at 49.4 in December, compared with a previous estimate of 48.3.
Wall Street’s main indexes had a stellar 2024, with the benchmark S&P 500 notching its best two-year run since 1997-1998.
The main catalysts were the Federal Reserve easing interest rates for the first time since 2020, investor hype around artificial intelligence and expectations of companies potentially benefiting from Trump’s policies.
Equity valuations are sitting above their long-term averages, but could be justified if corporate profits stay strong.
However, 2024’s rally ended with the S&P 500 and the Dow posting monthly declines in December as markets priced in Trump’s policy proposals to be inflationary and likely to slow down the Fed’s policy easing pace this year.
With inflation still above the 2 percent target, traders see the central bank leaving interest rates unchanged at its meeting later this month, and expect borrowing costs to be lowered by about 50 basis points by year-end, according to the CME Group’s FedWatch Tool.
A line chart showing the midpoint of the targeted midpoint for the federal funds rate and the implied rate of futures contracts.
A line chart showing the midpoint of the targeted midpoint for the federal funds rate and the implied rate of futures contracts.
Markets also weighed the likelihood that the new administration could issue more debt to finance its policies, which could worsen market volatility. The yield on the 10-year benchmark Treasury note hovered near an eight-month high.
Among other megacaps, Meta and Amazon.com added over 1.4 percent each.
