Nasdaq 100: Bullish Start to 2025 on Tech Optimism; Tesla Slips on Delivery Shortfall

What’s Driving the Market Today

Stock futures opened higher to kick off 2025, building on the momentum that led the S&P 500 to two consecutive years of annual gains exceeding 20%. Futures tied to the Dow Jones Industrial Average rose 0.7%, while S&P 500 futures also advanced 0.7%. Nasdaq-100 futures led with a 0.8% gain.

Despite late-2024 profit-taking, major indices posted strong returns for the year. The S&P 500 rose 23%, the Dow Jones climbed nearly 13%, and the Nasdaq Composite outperformed with a 29% increase.

Key Facts and Analysis: What Traders Need to Know Right Now

Broad Index Performance
The final days of 2024 saw selling pressure, resulting in the S&P 500’s first four-day year-end losing streak since 1966. However, the index still delivered a robust annual return. Gains were largely driven by AI excitement and optimism around potential interest rate cuts.

AI leaders and tech giants were pivotal in 2024. Nvidia soared 171%, and Apple posted a 30% gain. These companies were part of the “Magnificent Seven,” which significantly influenced market direction.

Investor optimism for 2025 persists, but some analysts warn the tech-driven rally may face challenges. UBS strategist Jonathan Golub highlighted that while market enthusiasm could raise concerns, strong data and lower recession risks present a case for continued growth.

Sector and Stock Performance

Tesla faced headwinds after reporting its first annual decline in vehicle deliveries. Q4 deliveries totaled 495,570, missing the 504,770 estimate. This shortfall pushed Tesla’s stock down over 3% in pre-market trading.

Nvidia started the year positively with a 1.7% rise. Loop Capital reiterated confidence in the stock, suggesting Nvidia’s momentum could continue into 2025. Synaptics jumped 5.9% following an announcement of a partnership with Google to integrate AI into its Astra hardware.

Cloudflare surged 5.6% after Goldman Sachs upgraded the stock from sell to buy, citing potential growth in sales and edge computing. Similarly, Topgolf Callaway Brands climbed 8.5% after Jefferies upgraded the stock, forecasting 65% upside.

Chinese stocks underperformed, with the iShares MSCI China ETF dropping 1.4% as weak purchasing managers’ index data dampened sentiment. Xpeng and JD.com both declined by over 1%.

Crypto-related stocks advanced as Bitcoin reclaimed $96,000. Coinbase and MicroStrategy each gained around 4%, while mining stocks, including Riot Platforms and Bitdeer, rose more than 3%.

Economic Data and Employment
Jobless claims data provided positive signals for the labor market. Initial filings for unemployment benefits fell to 211,000, below the 225,000 consensus estimate. Continuing claims dropped by 52,000 to 1.844 million, reversing from a recent three-year high.

The decline in jobless claims reflects labor market resilience, suggesting companies are holding on to workers despite economic uncertainties. This adds to market optimism heading into the new year.

Market Forecast: Where Could the Market Be Headed Next

The early strength in 2025 points to a bullish outlook, supported by solid economic data and positive momentum in tech and AI sectors. However, concerns around high valuations and profit-taking could introduce volatility.

Traders may find opportunities by balancing tech investments with sectors showing improving fundamentals. Economic indicators, particularly labor market strength, will play a crucial role in shaping the short-term market direction.

More Information in our Economic Calendar.