U.S. Stock Futures Rise to Begin 2025

As we pick the last bits of confetti from our hair and shake off the sleepiness, the stock market makes its first appearance for 2025 this morning. Fortunately, it reveals a lively scene with fresh economic insights on weekly employment data.

Before these numbers come out, we see the Dow climbing by 310 points, the S&P 500 up by 45 points, and the Nasdaq gaining 205 points. This is encouraging news as we look forward to recovering from a difficult December, where only the Nasdaq managed to end slightly positive; the Dow experienced a decline of -4.5% last month, while the small-cap Russell 2000 faced a nearly -8% drop.

Weekly Jobless Claims Remain Stable: 211K, 1.84M

On the labor market front, we have some positive news to kick off the new year. The Weekly Jobless Claims data indicates that the economy is holding steady: there were 211K Initial Jobless Claims filed last week, which is lower than the anticipated 225K and also below the slightly adjusted figure of 220K from the previous week. This result is significantly less than the 260K we noted in early October, which now appears to be an anomaly.

Continuing Jobless Claims also decreased, now resting at 1.844 million—the lowest count since September of last year. This number is notably lower than the previous week’s revised figure of 1.896 million. We have dipped below the 1.9 million mark yet again; in recent months, we've seen initial long-term jobless claims hovering at or above this value, only to be adjusted lower in the following week. The first half of November was the only period where we saw a week exceeding this figure.

It's essential to consider that these claims are reported during the busy holiday season. With people taking time off and making adjustments postponed until the new year, we may need a few weeks to gain a clearer view of week-to-week employment levels. The current jobless claims are significantly higher compared to the lows we witnessed a couple of years ago, leading to uncertainty about when, or if, we will return to those lower numbers.

Tesla Experiences First Decline in Yearly Deliveries

Just reported shortly before today’s market opening, Tesla (TSLA - Free Report) has revealed that its vehicle delivery numbers fell short of expectations. A total of 495,570 vehicles were delivered, which is below the anticipated 504,770. This marks the first time that Tesla’s 2024 delivery numbers are lower than those of 2023 since the auto industry received government assistance.

Shares dropped by -3% in response to the announcement, but this likely doesn't worry most TSLA investors this morning. The stock is still up by +13% over the past month and +55% since the November General Election. It's worth noting that CEO Elon Musk has considerable influence over the current administration, suggesting that Tesla’s fortunes might be affected by larger political events rather than just delivery statistics.

Looking Ahead: Stock Market Expectations

Broadly, the stock market is preparing for the entry of a new Trump administration, which many analysts believe will differ in approach compared to Trump's first term eight years ago. There are real concerns about how policies involving tariffs and immigration might influence the overall economy.

Next week is set to be a critical Jobs Week, which will provide further insights for market participants and the Federal Reserve regarding future monetary policy. Last month, new jobs exceeded 200K, contributing to an Unemployment Rate that remains modest at 4.2%. If these robust numbers continue into the next month, we can expect the Fed to maintain interest rates around 4.25-4.50% rather than opting for further cuts.

However, if signs of weakening employment begin to surface, this could shift the Fed’s viewpoint on interest rates since one aspect of their dual mandate is to promote full employment. While November showed strong gains with +227K new jobs, the figures for October, impacted by hurricanes, reported only a meager +36K.

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