Major US benchmarks extended a selloff for a fifth day, shaving more than a trillion dollars from share prices. A pair of deadly attacks compounded market angst, starting the first trading day of the year on a dour note.
An early rally collapsed driving the Nasdaq 100 down more than 1%. The tech-heavy gauge and the S&P 500 clawed back losses to end Thursday down 0.2%. Tesla Inc.’s post-Christmas slump swelled to nearly 20% after its annual vehicle sales dropped, dragging on the indexes.
Treasury yields steadied following a choppy session. The rate on the benchmark 10-year was nearly 20 basis points above the level prior to Jerome Powell’s hawkish turn at a Dec. 18 Federal Reserve meeting. Big moves have proliferated across asset classes after Powell’s board expressed waning enthusiasm for interest-rate cuts. The Cboe Volatility Index climbed for the fourth time in five days.
Tesla sagged after the electronic vehicle-marker’s fourth-quarter deliveries missed estimates and annual sales dropped for the first time in over a decade. The stock registered its worst five-day drop in more than two years.
For corporate earnings, 2025 will be a “show-me year,” according to Lisa Shalett at Morgan Stanley Wealth Management, who warned that the dominance of the Magnificent Seven — the big technology stocks responsible for the bulk of last year’s gains — was teetering. “This idea that they as a group can trade together and lead the market may falter in 2025,” she said. It’s a call echoed by others on Wall Street, including Bank of America Corp.’s Savita Subramanian. As for the grim slide in the final days of 2024, it’s “too soon to call it a bad omen,” Shalett told Bloomberg Television. While the notable absence of a Santa Rally has previously led to a rebound in stocks for the month of January, the year’s first trading day doesn’t offer a great signal for the whole 12-month period. Over the past four years, for example, it has actually been a contrarian indicator, Deutsche Bank notes. The S&P 500 ended the year inversely of how it started.
Extending that analysis back to 1928, the year’s first trading day and the SPX’s annual performance have a poor correlation and have only moved in tandem 50% of the time.
Treasuries erased gains after a reading of weekly jobless claims fell to an eight-month low. A Bloomberg gauge of the dollar’s strength traded at a more than two-year peak.
Goldman Sachs economists led by Jan Hatzius noted that “seasonal adjustment challenges can make jobless claims readings particularly volatile around the holiday season.”
US stocks had been straining to snap a losing streak that took some shine off the S&P 500’s best two-year run dating back to the late 1990s. The index has surged more than 50% since the start of 2023, driven by gains in the tech megacaps amid enthusiasm about the boost to profits from artificial intelligence.
An attack on revelers celebrating New Year’s in New Orleans thrust US domestic security back into the spotlight less than a month before Donald Trump is sworn in as president. The Federal Bureau of Investigation is probing that incident as well as the deadly explosion of a Tesla Cybertruck outside of Trump’s hotel in Las Vegas.
A shooting overnight at a nightclub in New York City only added to the anxiety, while authorities said it wasn’t related to terrorism. Source: Bloomberg