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The stock market ended 2024 with a whimper, but it is poised to begin 2025 with a bang. Currently, the S&P 500 futures are up 41 points and are trading 0.8% above fair value, the Nasdaq 100 futures are up 192 points and are trading 0.9% above fair value, and the Dow Jones Industrial Average futures are up 271 points and are trading 0.7% above fair value.
There isn't a specific news factor accounting for the positive bias. On the contrary, the biggest piece of news coming off the holiday is the horrific act of terror on Bourbon Street in New Orleans on New Year's Day that killed 15 people and injured dozens more. There is nothing good in that.
The gains expected at the open are rooted in some mechanical factors like rebalancing activity and new inflows to start the month, quarter, and year. There is also some early speculation rooted in a buy-the-dip bias following the lackluster stretch to year end.
Over the last five sessions, the Dow, Nasdaq, S&P 500, S&P 400, and Russell 2000 declined 0.9%, 2.3%, 1.6%, 0.4%, and 0.3%, respectively. The 1.6% decline in the S&P 500 puts the so-called Santa Claus Rally in jeopardy, but it can be saved if trading over the next two sessions gets the S&P 500 back above 5974.07 at Friday's close.
A big step toward that end will be made when the opening bell rings. The question is, will the opening bang degrade into a whimper as today's session unfolds?
Notably, major indices in Europe started their first session of 2025 on a robust note only to be met just as quickly with a move to sell into that strength. They have since stabilized and have worked their way back from lower levels in afternoon trading.
Stocks have some recovery runway with Treasury yields easing a bit. The 2-yr note yield is down three basis points to 4.21% and the 10-yr note yield is down four basis points to 4.53%.
Some relatively weak December manufacturing PMI readings out of China and Europe have contributed to that improvement, although the weekly initial jobless claims and continuing jobless claims data out of the U.S. stifled some of the rebound interest in the Treasury market.
The reason being is that the claims data were encouraging. Initial jobless claims for the week ending December 28 decreased by 9,000 to 211,000 (Briefing.com consensus 224,000) while continuing jobless claims for the week ending December 21 decreased by 52,000 to 1.844 million.
The key takeaway from the report is the low level of initial claims -- a leading indicator -- as that connotes a situation where employers are reluctant to let employees go, which goes hand-in-hand with an optimistic view of business prospects.
Other data out this morning will be the final December S&P Global US Manufacturing PMI (prior 49.7) at 9:45 a.m. ET and the November Construction Spending Report (Briefing.com consensus 0.2%; prior 0.4%) at 10:00 a.m. ET.
