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US stocks stepped higher on Friday, looking to shake off a downbeat start to 2025 as Tesla (TSLA) shares looked for a comeback.
The S&P 500 (^GSPC) rose 0.6%, while the Dow Jones Industrial Average (^DJI) were also up roughly 0.5%. The tech-heavy Nasdaq Composite (^IXIC) put on 0.8%.
Friday is the last day for the S&P 500 (^GSPC) to pull off a “Santa Claus” rally, watched closely as a historical harbinger of solid returns for January and the year.
But hopes are dim after the benchmark fell again on Thursday to notch a five-session losing streak, the longest since April. The S&P 500 and Dow are both on track to end the holiday-shortened week with losses of over 1%, while the Nasdaq is facing a weekly drop of almost 2%.
Meanwhile, Tesla shares nudged up after the EV maker said its sales in China climbed to a record high in 2024. Tesla’s first yearly decline in global sales dragged the stock down 6% on Thursday.
US Steel (X) stock slid almost 8% after President Joe Biden blocked Japanese buyer Nippon Steel’s $14.9 billion takeover of the company, which had become a lightning rod for political opposition.
On the data docket, an update on US manufacturing due later should provide insight into whether the health of the US economy will keep the Federal Reserve reluctant to cut interest rates.
LIVE 5 updates
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US Steel drops 6% as Biden blocks merger with Nippon Steel
The blocked $14.9 billion sale of US Steel (X) to Japan’s Nippon Steel begs the question of what comes next for the iconic Pittsburg-based steelmaker.
On Friday, shares of US Steel fell more than 6% after President Biden announced his decision to to block foreign ownership of the American company.
Union leaders, politicians and competitor Cleveland-Cliffs (CLF) an original bidder for US Steel, have all weighed in on the merger since it was announced in 2023.
“It’s been a highly politicized decision the entire way through” Josh Spoores, steel analyst at CRU Group, told Yahoo Finance on Friday.
The analyst notes its unlikely Cleveland-Cliffs which has hinted it’s still interested in acquiring its competitor, would end up with the purchase.
“I think it’s possible but I don’t know that US Steel would be interested or that they have to do that. They’re in a much better position today than they were a few years ago and I think US Steel is perfectly situated to run their assets as their own operator today,” said Spoores.
However the analyst notes industry capacity will likely be reduced amid a backdrop of lagging steel prices.
“Nippon had said they would invest and wouldn’t take anything [capacity] down. But now we’re at the point where prices are down, profits are down, it’s likely that US Steel takes down a facility,” said the analyst.
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Hopes that the start of the year will salvage a “Santa Claus” rally are dwindling.
Friday is the last day for the S&P 500 (^GSPC) to pull off the upswing, in which the stock market historically has recorded gains from the last five sessions of December through the first two trading days of January. The rally is watched as a historical harbinger of solid returns for January and the year.
Since 1950, the S&P 500 has generated an average return of 1.3% during the Santa Claus Rally period, with positive returns occurring 79% of the time, according to Adam Turnquist, chief technical Strategist for LPL Financial.
But the benchmark index is on track to lose 2% for the week.
“We believe near-term downside risk remains elevated given the recent deterioration in market breadth and momentum, stretched bullish sentiment, and macro headwinds from higher rates and a stronger dollar,” said Turnquist.
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Stocks rise but are poised to record a loss for the week
US stocks stepped higher on Friday, looking to shake off a downbeat start to 2025 as markets waited for manufacturing data and Tesla (TSLA) shares struggled for a comeback.
The S&P 500 (^GSPC) rose 0.5%, while the Dow Jones Industrial Average (^DJI) was also up roughly 0.5%. The tech-heavy Nasdaq Composite (^IXIC) put on 0.6%.
Friday is the last day for the S&P 500 (^GSPC) to pull off a “Santa Claus” rally, watched closely as a historical harbinger of solid returns for January and the year.
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Good morning. Here’s what’s happening today.
Earnings: None of note.
Economic news: ISM manufacturing, ISM prices paid (December)
Here are some of the biggest stories you may have missed:
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JPMorgan catches an early 2025 upgrade
Eyes on JPMorgan (JPM) this morning after Wolfe Research upgrades the stock.
What analyst Steven Chubak is saying about his upgrade:
“While JPM is not a 2025 top pick, we believe shares should outperform universal broker/trust peers. When we downgraded shares alongside our second quarter 2024 preview, we believed deeper rate cuts were poised to weigh on net interest income (given JPM’s heavier short-end gearing). Since that time, rate expectations have been revised higher and we now see upside to 2026 consensus net interest income, supporting a more robust EPS growth algorithm through 2026. While absolute valuation (P/E and price to tangible book value) is still a bit frothy vs. money center peers, on our 2026 EPS we estimate that JPM trades at ~12.5x (modest premium to peers) — given the firm has consistently generated the strongest EPS growth among our bank coverage (supported by capital markets/deposit share gains), we believe a premium valuation is warranted, prompting our upgrade to out-perform.”
JPM shares are up about 1% in premarket trading.
