S&P 500 Forecast: NVDA and AVGO Climb but TSLA Weighs on Nasdaq

Wall Street Opens 2025 with Gains Despite Tesla Weakness

Wall Street started 2025 on a positive note as major indexes climbed in the first trading session, driven by optimism around potential interest rate cuts and a new political environment. However, Tesla’s sharp drop following disappointing delivery data tempered gains, especially on the Nasdaq.

At 15:53 GMT, the Dow Jones Industrial Average is trading 42674.26, up 130.04 or +0.31%. The S&P 500 Index is at 5906.61, up 24.98 or +0.42% and the Nasdaq Composite is trading 19396.39, up 85.59 or +0.44%.

What is Driving the Markets Higher?

The S&P 500 advanced as eight out of eleven sectors saw gains, with energy stocks leading the charge, rising 1.78%. Financials and utilities also contributed to the upward move. Small-cap stocks, represented by the Russell 2000, gained 1.4%, reflecting broad-based buying.

Real estate was one of the few sectors to decline, dipping 0.1%, while the consumer discretionary sector slipped 0.53%. Technology, despite strong performances from chipmakers, ended with a modest 0.08% gain as Tesla’s 3.6% slide weighed heavily on the sector.

Tesla’s fall followed news of its first annual decline in deliveries, contradicting CEO Elon Musk’s growth predictions. Despite aggressive incentives, demand for Tesla’s aging lineup faltered, disappointing investors who had driven the stock higher following the U.S. election.

Economic Data Fuels Optimism

Fresh economic data provided a mixed but largely positive backdrop. Jobless claims fell unexpectedly, reinforcing the strength of the labor market. Additionally, the final estimate of S&P Global’s manufacturing survey for December rose to 49.4 from 48.3, signaling resilience in industrial activity even as it remains below the expansion threshold of 50.

Markets took comfort in the Federal Reserve’s rate-cutting trajectory after easing policies in 2024 for the first time since 2020. However, investors remain cautious. Inflation, still above the Fed’s 2% target, could delay further rate cuts. Traders currently expect 50 basis points of cuts by the end of 2025, although rates are forecast to hold steady at the January meeting.

Key Movers and Sector Performance

Beyond Tesla, tech giants like Meta and Amazon posted gains of over 1.4%, while Nvidia and Broadcom rose 1.6% and 2%, respectively, contributing to Nasdaq’s broader resilience. Crypto-related stocks surged as MicroStrategy and MARA Holdings rose 6% and 7.8%, tracking higher Bitcoin prices.

In bond markets, the 10-year Treasury yield remained near eight-month highs, reflecting investor concerns over potential debt issuance by the incoming administration, which could increase market volatility.

Market Outlook

Despite a strong start to the year, markets face headwinds, particularly around inflation and fiscal policy. While the S&P 500’s record two-year run provides optimism, rising valuations could strain further upside unless corporate earnings keep pace.

Short-term, markets are likely to remain volatile, with investors closely monitoring inflation data and Fed policy signals. A cautiously bullish outlook persists, though downside risks could emerge if economic data weakens or fiscal policies exacerbate inflationary pressures.

More Information in our Economic Calendar.