In the commencement of 2025, Tesla's performance, along with Nasdaq, marked a subdued beginning.
Highlights
- Tesla Experiences Dip in Deliveries, Shares Plummet 22% Since December
- Debt Limit and Dockworker Strife Threaten Financial Stability
- Gold and Oil Prices Surge Amidst Economic Uncertainty and Inflation Perils
The New Year's trading session commenced with equities recording initial gains, only to witness those gains dissipate as the day progressed. Ultimately, the S&P 500 and Nasdaq Composite recorded declines of approximately 0.2%, while the Dow Jones Industrial Average saw a nearly 0.4% drop. Sector-wise, only small caps managed to post gains on the day, with the Russell 2000 recording an addition of 0.7%. Despite the nominal day's swings, intra-day ranges displayed considerable breadth.
One of the day's major losers was Tesla, whose shares plunged 22% since December 18, when they closed at $488.54. The Electric Vehicle (EV) company reported an annual decline of 1% in deliveries for the year-to-year comparison. Total deliveries stood at 1.79 million, marking the first such decline in almost a decade. Meanwhile, Chinese competitor BYD narrowed the gap with Tesla, delivering 515,000 vehicles in December and 1.76 million units for the entire year, registering a 12% year-over-year increase.
Two other newsworthy stocks in focus were Apple and U.S. Steel. On Thursday, Apple decided to settle complaints of exploiting user data acquired through Siri by offering $95 million in cash to affected users. Meanwhile, The Washington Post reported that the Biden Administration aims to impede Nippon Steel's $14.9 billion merger with U.S. Steel, a development that negatively impacted U.S. Steel shares, indicating a potential 10% decline in premarket trading.
The absence of the traditional "Santa Claus rally" and subsequent stock market slide are partly attributed to the impending debate over the debt ceiling. The upper limit on government borrowing resumed its operation this week, following a suspension in June 2023, and Congress has been given until anywhere between January 14 and 23 to either lift or suspend the ceiling. Failure to act within this timeframe may result in the country's inability to meet its obligations and potentially lead to a default. Complicating matters further is the House vote to select a new Speaker, with incumbent Mike Johnson attempting to secure enough votes to maintain his position. However, as with his initial election, internal Republican dissent could hinder the electoral process. Any delay in the selection of a new Speaker will further heighten the urgency for Congress to address the debt ceiling issue.
Elsewhere, the possibility of an International Longshoremen/s Association (ILA) strike looms, as negotiations over a new contract with management remain unresolved. There's speculation of an imminent strike from January 15, posing a threat to ports from the East Coast all the way to Texas. In the event of a strike, potential port shutdowns could exert a sizable influence on the economy, potentially exacerbating inflation. Therefore, the ongoing negotiations should warrant traders' attention.
Theive looming debt ceiling issue and potential ILA strike could be contributing factors to the recent run in gold prices. After an impressive 2025, gold prices have been on the rise, gaining 1.5% on Thursday alone. Similarly, oil prices have been inching up, settling above $73 per barrel on Thursday. With prices now above $70, recession-related concerns appear to have eased.
This current trading session, I'll be keeping an eye on market attempts at a recovery. Despite an initial bullish start on Thursday, the market ultimately failed to maintain its momentum. Investors have been offloading gains, leading me to ponder when this trend may cease. While a period of selling after such activity is not uncommon, I'm expecting a more substantial selloff accompanied by a subsequent market rebound. With such conditions prevailing, I believe we may be gearing up for further weakness, and until we see a shift, it seems we're in for an extended period of volatility. As always, it's wise to adhere to your investment strategies and long-term objectives.
- The surge in oil prices, currently above $73 per barrel, can be partially attributed to economic uncertainty and inflation perils, as highlighted by recent market analysis.
- Tesla's shares have experienced a significant dip, plummeting 22% since December 18, 2022, and this decline might have been influenced by both the electric vehicle market competition and broader economic factors.
- In a move that negatively impacted U.S. Steel shares, reports suggest that the Biden Administration aims to impede Nippon Steel's proposed merger with U.S. Steel, raising concerns about potential market volatility in the steel sector.
- Gold prices have been on the rise, gaining 1.5% on Thursday, reflecting both investor confidence and economic uncertainties, as well as the potential impacts of the debt limit issue and potential ILA strike on the broader market.
