Thursday, January 2, 2025

As we comb the last pieces of confetti out of our hair and wipe the sleep from our eyes, we re-enter stock market activity for the first time in 2025 this morning. It’s not a barren landscape, either: we see new economic reads on weekly employment data.

Ahead of these numbers, the Dow was +310 points, the S&P 500 +45 and the Nasdaq +205 points. This will hopefully lead to a bounce-back from a weak December, where only the Nasdaq finished marginally in the green; the Dow lost -4.5% last month and the small-cap Russell 2000 dumped nearly -8%.

Weekly Jobless Claims Remain Tame: 211K, 1.84M

It’s good news on the labor market front to start the new year, with Weekly Jobless Claims once again behaving themselves on behalf of the economy writ large: 211K Initial Jobless Claims were filed last week, below the 225K expected and the slightly upwardly revised 220K from the previous week. This is also well below the early-October print of 260K we saw, which currently looks more and more like an outlier.

Continuing Jobless Claims drifted downward week over week, to 1.844 million — the lowest weekly number since September of last year, and notably lower than the previous week’s downwardly-revised 1.896 million. This takes us beneath the 1.9 million threshold yet again; several times over the past few months we’d seen an initial longer-term jobless claims number at or above 1.9 million, only to be revised lower the following week. Only the first half of November contained a week above this figure.

One important note about these jobless claims numbers: we’re looking at the yearly holiday period. With vacation days taken and right-sizing decisions put off until after the new year, we’re probably a couple weeks away from having a clear picture on week-by-week employment levels. And the fact of the matter is we are way up from the lows in jobless claims we were seeing a couple years ago; it’s unclear when we may return to those ranges, if we ever do.

Tesla Posts 1st Decline in Yearly Deliveries

Just announced less than a half hour before today’s opening bell, Tesla TSLA has reported vehicle deliveries numbers beneath expectations. A total of 495,570 vehicles were reported to have been delivered, lower than the 504,770 expected. This puts 2024 deliveries numbers for Tesla below that of 2023 — the first time since the auto industry was bailed out by the U.S. government.

Shares are down -3% on the news, but that’s not likely troubling most TSLA owners this morning. The stock is still +13% over the past month, +55% since the General Election in November. We already know CEO Elon Musk has an uncommon level of influence on the incoming administration; thus, we can see Tesla’s fortunes are likely to be impacted by bigger things than vehicle delivery numbers.

What to Expect from the Stock Market Looking Ahead

Of course, the bigger picture for the market includes an incoming Trump administration, which many analysts believe will have a somewhat different flavor than the first time Trump moved into the White House eight years ago. And there are some real questions and concerns regarding the impact things like tariffs and deporting immigrants will have on the economy as a whole.

Nearer term, next week is Jobs Week, which will help inform market participants and the Fed about monetary policy going forward. Last month, we saw jobs gains north of 200K with an Unemployment Rate at a still-mild 4.2%. Should these strong numbers carry forward another month, we can expect the Fed to keep interest rates steady at 4.25-4.50% instead of cutting them further.

However, should we start to see weakening levels of employment in a meaningful way, that may change the perspective the Fed has on interest rates, considering one half of its dual mandate is to support full employment. Also, while November brought us a robust +227K new jobs, October’s (hurricane-ravaged) situation brought in a paltry +36K for the entire month.

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