(Bloomberg) — A rally on the earth’s largest tech firms lifted stocks at the beginning of the primary full trading week in 2025. The dollar trimmed losses as President-elect Donald Trump said his tariff plan won’t be pared back.
Most Read from Bloomberg
Equities continued to achieve traction after a rout in the ultimate stretch of last 12 months, with the S&P 500 up over 1% on Monday. Nvidia Corp. led megacaps higher, jumping 5% toward a record ahead of chief Jensen Huang’s speech. Banks climbed on deregulation optimism, with Michael Barr stepping down because the Federal Reserve’s vice chair for supervision. The news also fueled a steepening of the Treasury curve, with shorter maturities outperforming.
The trading desk of JPMorgan Chase & Co. led by Andrew Tyler said while risks to stocks’ fierce rally are mounting, a bearish downturn stays “extremely unlikely” amid strong economic growth. Gains in US stocks this 12 months will likely be driven mainly by corporate earnings, in response to Goldman Sachs Group Inc.’s David Kostin, who expects the S&P 500 to hit 6,500 by year-end.
“The recovery we’ve seen Friday and today shows just how strong the ‘buy the dip’ mentality still is,” said Mark Hackett at Nationwide. “Investors proceed to lean heavily on tech. Looking ahead, 2025 won’t be a 12 months for straightforward double-digit gains by solely investing within the S&P 500. Success on this market would require more discipline and creativity from investors.”
The S&P 500 rose 1.1%. The Nasdaq 100 added 1.5%. The Dow Jones Industrial Average gained 0.7%. A gauge of the “Magnificent Seven” megacaps” climbed 2.1%. Citigroup Inc. also jumped on a bullish analyst call. Tencent Holdings Ltd. depositary receipts slid because the Defense Department designated it a Chinese military company operating within the US.
The yield on 10-year Treasuries advanced one basis points to 4.61%. The Bloomberg Dollar Spot Index fell 0.6%. The loonie held gains as Prime Minister Justin Trudeau is resigning after greater than nine years leading Canada. Bitcoin topped $100,000.
“The oversold rally that drove impressive intraday gains and stronger breadth readings last Friday looks to proceed,” said Dan Wantrobski at Janney Montgomery Scott. “Market breadth/participation will see mean reversion higher in the approaching sessions — driving the rally efforts we’re currently experiencing.”
Paul Nolte at Murphy & Sylvest Wealth Management says 2025 should see a volatile market.
“The big swings may provide opportunities for each buyers and sellers,” he noted.
The S&P 500’s December pullback didn’t prevent clients from being net buyers in nine of 11 sectors last month, in response to Chris Larkin at E*Trade from Morgan Stanley.
“While there could have been a defensive element to a few of the buying in utilities and real estate, the push into the buyer discretionary sector suggested more of a ‘risk-on’ mindset — led by purchases of TSLA and AMZN,” he noted.
Traders are also gearing up for Friday’s jobs report, which is anticipated to indicate employers tempered hiring to wrap up a 12 months of moderating yet still-healthy labor market. The info is unlikely to change the view of Federal Reserve officials that they will slow the pace of rate cuts amid a durable economy and inflation that’s dissipating only steadily.
Fed Governor Lisa Cook said Monday that policymakers can proceed more cautiously amid a sturdy labor market and lingering inflation pressures.
US stocks have gotten rate sensitive again, with breadth turning narrow after the US 10-year Treasury yield rose above 4.5%, in response to Morgan Stanley strategists led by Michael Wilson.
“With a view to see the return of a ‘good is nice’ backdrop where hotter economic data drives upside in stocks even amid higher rates, we likely have to see more convincing evidence that animal spirits are inflecting and translating into stronger economic activity,” the strategists wrote.
Meantime, Lori Calvasina at RBC Capital Markets says investor exuberance within the stock market is beginning to “self-correct” as a measure of sentiment and positioning fell into the 12 months end.
“While this doesn’t tell us that the recent period of malaise within the stock market is over, we do think this deterioration in sentiment is definitely excellent news for the stock market long run,” they wrote.
Corporate Highlights:
American Airlines Group Inc. was upgraded to purchase from hold at TD Cowen, Jefferies and Melius.
Uber Technologies Inc. said it entered into an accelerated share repurchase agreement with Bank of America to repurchase $1.5 billion of shares of Uber common stock, as a part of its previously announced share repurchase authorization.
Qualcomm Inc. introduced latest chips designed to power personal computers able to running the newest artificial intelligence software yet cost as little as $600.
Carvana Co. said it has reestablished an agreement with Ally Financial Inc. to sell the lender as much as $4 billion in used-vehicle loan receivables over the following 12 months, a move that counters one claim by short seller Hindenburg Research that the financier was pulling back on their relationship.
Walt Disney Co. and streaming provider FuboTV Inc. agreed to mix their online live TV businesses, creating the second-biggest digital pay-TV provider.
Paychex Inc. is in advanced talks to accumulate Paycor HCM Inc., a smaller rival in payroll processing, in response to individuals with knowledge of the matter.
Nippon Steel Corp. and United States Steel Corp. jointly filed a pair of lawsuits in a last-ditch effort to preserve their planned merger, which was blocked last week by President Joe Biden.
Hon Hai Precision Industry Co. reported faster-than-expected 15% revenue growth after the server assembly partner to Nvidia rode sustained demand for AI infrastructure.
Key events this week:
Eurozone CPI, unemployment, Tuesday
US job openings, trade, ISM services, Tuesday
Fed’s Thomas Barkin speaks, Tuesday
Eurozone PPI, consumer confidence, Wednesday
US ADP employment, Fed minutes, consumer credit, Wednesday
Fed’s Christopher Waller speaks, Wednesday
China CPI, PPI, Thursday
Eurozone retail sales, Thursday
US state funeral and national day of mourning for former President Jimmy Carter is a federal holiday, Thursday
Fed’s Patrick Harker, Thomas Barkin, Jeff Schmid speak and Michelle Bowman, Thursday
Japan household spending, leading index, Friday
US jobs report, consumer sentiment, Friday
A few of the principal moves in markets:
Stocks
The S&P 500 rose 1.1% as of 12:37 p.m. Latest York time
The Nasdaq 100 rose 1.5%
The Dow Jones Industrial Average rose 0.7%
The MSCI World Index rose 1.1%
Bloomberg Magnificent 7 Total Return Index rose 2.1%
Currencies
The Bloomberg Dollar Spot Index fell 0.6%
The euro rose 0.7% to $1.0384
The British pound rose 0.7% to $1.2511
The Japanese yen fell 0.2% to 157.55 per dollar
Cryptocurrencies
Bitcoin rose 3.3% to $101,759.73
Ether rose 1.1% to $3,686.76
Bonds
The yield on 10-year Treasuries advanced one basis point to 4.61%
Germany’s 10-year yield advanced two basis points to 2.45%
Britain’s 10-year yield advanced two basis points to 4.61%
Commodities
West Texas Intermediate crude fell 0.3% to $73.71 a barrel
Spot gold fell 0.2% to $2,636.13 an oz.
This story was produced with the help of Bloomberg Automation.
–With assistance from Andre Janse van Vuuren, Allegra Catelli, Julien Ponthus and Catherine Bosley.