Wall Street kicked off 2025 on a positive note as investors looked to break a four-day losing streak, with futures pointing to gains led by technology giants and stable Treasury yields. The upbeat start comes after markets closed out 2024 with the S&P 500 recording its strongest two-year performance since 1998, despite a modest decline in the final trading session of the year.
The benchmark index finished 2024 with an impressive 23% annual gain, though it dipped 25 points in the last session, trimming its fourth-quarter advance to 2.1%. As trading begins in the new year, market participants are shifting their attention to upcoming fourth-quarter earnings reports and December employment data, which will provide crucial insights into the Federal Reserve’s cautious stance on interest rates.
The transition to the Trump administration, with the president-elect’s inauguration scheduled for January 20, remains a key factor in the Fed’s measured approach. LPL Financial’s chief equity strategist Jeffrey Buchbinder outlined four essential elements for market strength in 2025: sustained economic growth avoiding recession, supportive Federal Reserve policies, robust corporate profits, and beneficial fiscal and regulatory measures from the incoming
administration.
In early trading, futures markets indicated a strong opening, with S&P 500 contracts suggesting a 43-point gain. Dow Jones Industrial Average futures pointed to a 244-point increase, following its modest 0.5% fourth-quarter rise in 2024. The tech-heavy Nasdaq, which surged 28.6% in 2024, was poised for a 190-point advance.
Treasury markets showed signs of stability, with the benchmark 10-year yield easing to 4.533% after reaching above 4.6% in December. Two-year Treasury notes settled at 4.215%, while the dollar index approached a two-year peak at 108.462.
Tesla commands investor attention as the electric vehicle maker prepares to release its fourth-quarter delivery figures, amid news of a tragic Cybertruck incident outside a Las Vegas Trump hotel that resulted in one fatality and multiple injuries.
International markets displayed mixed performance, with European stocks showing slight weakness as the Stoxx 600 declined 0.2% in Frankfurt. London’s FTSE 100 managed a marginal 0.03% gain, supported by strong performance in energy and commodity stocks. Asian markets faced downward pressure, with Japan’s Nikkei 225 falling 0.96% and the MSCI ex-Japan index dropping 0.44%.
The positive market momentum continues to build on 2024’s exceptional performance, though analysts remain mindful of potential challenges as the current bull market enters its third year. Market observers are closely monitoring Treasury movements and their impact on equity valuations, while also assessing how the incoming administration’s policies might affect market dynamics.
The intersection of monetary policy, fiscal measures, and corporate performance will likely shape market direction in the early months of 2025, as investors navigate the transition to new leadership and potential shifts in economic policy. With strong technical indicators and historical precedent supporting continued growth, market participants maintain cautious optimism while acknowledging both upside potential and downside risks in the evolving financial landscape.