NEW YORK (AP) — U.S. stock indexes are starting 2025 with gains on Thursday.
The S&P 500 rose 0.8% in morning trading and was on track to break a four-day losing streak that dimmed the end of its stellar 2024. The Dow Jones Industrial Average was up 317 points, or 0.7%, as of 10 a.m. Eastern time, and the Nasdaq composite was 0.9% higher.
Stocks of the smallest companies led the way, as they often do when optimism is rising about the strength of the U.S. economy.
They can get a larger benefit than big multinationals, and the Russell 2000 index of small stocks rose 1.3% after a report said fewer U.S. workers applied for unemployment benefits last week than economists expected. Its the latest signal that the job market remains remarkably solid despite high interest rates brought by the Federal Reserve in recent years to stifle inflation.
After surprising doubters by avoiding a recession last year, the hope is that the U.S. economy can continue growing in 2025 after the Fed reduced the pressure on it late last year by lowering interest rates.
Also at the head of the market were some Big Tech stocks, which have been leading Wall Street for most of the last few years. Nvidia, whose chips are powering the world’s move into artificial-intelligence technology, rose 2.4% after following up its nearly 240% surge in 2023 with a better than 170% jump last year.
Some investors and analysts are counting on the AI rush to continue, even though critics say it’s sent prices for some stocks too high too quickly. As the calendar flips to a new year, Wedbush analyst Dan Ives says it’s the ”same tech playbook in year 3 of this tech AI driven bull market,” for example.
So much optimism, of course, can also make contrarians feel nervous.
A measure of how heavily Wall Street analysts are recommending stocks is at its highest level since early 2022, according to a measure kept by Bank of America strategist Savita Subramanian. She says the measure has been a reliable indicator in the past, and it’s just a bit shy of triggering a signal for contrarians to sell.
One member of the group of vaunted Big Tech stocks known as the “Magnificent Seven,” Tesla, slumped after it disclosed it delivered fewer vehicles in the last three months of 2024 than analysts expected. The electric-vehicle company’s stock fell 4%.
In the bond market, Treasury yields eased to take some pressure of the stock market. The yield on the 10-year Treasury slipped to 4.55% from 4.57% late Tuesday.
The economic data was less encouraging in China. Stock indexes fell 2.2% in Hong Kong and 2.7% in Shanghai after a survey of factory managers, the Caixin China Purchasing Managers Index, showed activity expanding at a slower pace in December. New orders, employment and business sentiment weakened.
Upbeat talk by Chinese leader Xi Jinping in a New Year’s address did little to raise optimism among investors who are hoping for more aggressive action to support the world's second-largest economy and boost stock prices.
“We have adopted a full range of policies to make solid gains in pursuing high-quality development. China’s economy has rebounded and is on an upward trajectory,” Xi said in a New Year message, according to the official Xinhua News Agency.
Stock indexes were mixed elsewhere in Asia and Europe.
Commodity prices rallied, with crude oil and natural gas rising at least 2%. Gold gained 0.7% to $2,660.70 per ounce.
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AP Business Writer Yuri Kageyama contributed.
