Stock market today: Wall Street opens 2025 with gains

Key Takeaways:

• Major U.S. stock indexes rose significantly, breaking a four-day losing streak.
• Small-cap stocks outperformed, with the Russell 2000 rising 1.3%.
• Fewer unemployment claims point to a strong job market.
• Big Tech stocks like Nvidia continued to surge, though Tesla stumbled.
• Chinese markets declined due to slowing factory activity, contrasting U.S. optimism.

Markets Rally to Start the New Year

U.S. stock indexes started 2025 with notable gains on Thursday, instilling fresh optimism among investors. The S&P 500 rose 0.8% in morning trading, positioning itself to break a four-day losing streak that had dimmed the end of its stellar 2024 performance. The Dow Jones Industrial Average climbed by 317 points, or 0.7%, while the Nasdaq Composite advanced 0.9%.

Small-Cap Stocks Lead the Charge

Stocks of smaller companies outpaced the broader market, reflecting increased confidence in the U.S. economy’s strength. The Russell 2000 index of small-cap stocks surged 1.3% following a report that fewer U.S. workers applied for unemployment benefits last week than economists had anticipated. Historically, small companies benefit more during periods of economic optimism as they are more sensitive to domestic economic conditions.

Job Market Shows Resilience

The latest unemployment data underscored the robust state of the job market, despite the higher interest rates implemented by the Federal Reserve in recent years to curb inflation. The decline in unemployment claims suggests that the economy continues to grow, bolstering investor sentiment. After defying expectations by avoiding a recession in 2024, there’s hope that the momentum will carry through 2025, especially after the Fed eased pressures by lowering interest rates late last year.

Tech Titans Continue to Soar

Big Tech stocks, which have been at the forefront of Wall Street’s growth in recent years, maintained their upward trajectory. Nvidia, a leader in artificial intelligence technology, saw its stock rise by 2.4%. This gain comes after an impressive nearly 240% surge in 2023, followed by a more than 170% jump last year. “It’s the same tech playbook in year three of this tech AI-driven bull market,” noted Dan Ives, an analyst at Wedbush Securities, highlighting continued investor confidence in the tech sector.

Tesla’s Unexpected Dip

Contrasting the tech sector’s overall performance, Tesla shares fell by 4% after the company disclosed it delivered fewer vehicles in the last quarter of 2024 than analysts had predicted. As a member of the esteemed “Magnificent Seven” group of Big Tech stocks, Tesla’s shortfall served as a reminder of the market’s unpredictability and the challenges even industry leaders can face.

Global Markets Paint a Mixed Picture

While U.S. markets climbed, international markets experienced varied outcomes. In China, stock indexes in Hong Kong and Shanghai dropped by 2.2% and 2.7%, respectively. The decline followed the Caixin China Purchasing Managers Index report, which indicated factory activity expanded at a slower pace in December. New orders, employment, and business sentiment all weakened, dampening investor morale despite upbeat remarks from Chinese leader Xi Jinping.

“We have adopted a full range of policies to make solid gains in pursuing high-quality development. China’s economy has rebounded and is on an upward trajectory,” Xi stated in a New Year message, as reported by the official Xinhua News Agency. However, his comments did little to alleviate investor concerns over the country’s economic slowdown.

Commodity Prices and Bond Yields Adjust

Commodity markets saw positive movements, with crude oil and natural gas prices rising by at least 2%. Gold also gained 0.7%, reaching $2,660.70 per ounce, indicating a continued interest in traditional safe-haven assets. In the bond market, Treasury yields eased slightly, reducing some pressure on the stock market. The yield on the 10-year Treasury slipped to 4.55% from 4.57% late Tuesday.

Looking Ahead

As Wall Street embraces the new year with renewed vigor, investors remain cautiously optimistic. The strong start reflects confidence in the U.S. economy’s resilience but also highlights the need to monitor global economic indicators. With both opportunities and challenges on the horizon, 2025 promises to be a pivotal year for markets worldwide.