(Bloomberg) — An early rally in stocks collapsed and major U.S. indexes appeared poised to extend the selloff that trimmed more than $1 trillion from stock prices over the past four sessions. Tesla’s post-Christmas decline swelled to nearly 20% after its annual car sales fell.
Most read from Bloomberg
Treasury yields drifted higher, pushing 10-year interest rates about 20 basis points above the level prior to Jerome Powell’s hawkish shift at the Fed’s Dec. 18 meeting. The big moves spread across asset classes after Powell’s board expressed waning enthusiasm for cutting interest rates. The Cboe Volatility Index rose for the fourth time in five days.
Among individual stocks, Tesla stock was the worst performer, falling 6.9% after the e-car company’s fourth-quarter deliveries beat estimates and annual sales fell for the first time in more than a decade.
This year will be a “showcase year” for corporate earnings, according to Lisa Shalit of Morgan Stanley Wealth Management. As for the bleak end of 2024, it’s too early to call it a bad omen, she told Bloomberg TV.
Treasuries erased an early advance after the weekly unemployment claims reading fell to an eight-month low. Bloomberg’s gauge of dollar strength traded at its highest level in more than two years.
“Seasonal adjustment challenges could make unemployment claims readings particularly volatile during the holiday season,” Goldman Sachs economists led by Jan Hatzius noted.
US stocks were struggling to halt a string of losses that had taken some of the shine out of the S&P 500’s best two-year performance dating back to the late 1990s. The index has risen more than 50% since the beginning of 2023, driven by gains in technology giants amid enthusiasm about increased profits from artificial intelligence.
“At the beginning of the year, analysts tend to be quite optimistic — you have a very strong year-on-year earnings outlook,” Daniel Morris, chief market strategist at BNP Paribas Asset Management, told Bloomberg TV. “Even if we don’t get 20% Nasdaq earnings growth, the way analysts might suggest, if it’s just 15%, the markets will probably do well.”
Meanwhile, the attack on New Year’s revelers in New Orleans has put US homeland security back in the spotlight less than a month before Donald Trump is sworn in as president. The FBI is investigating this incident as well as the deadly explosion of a Tesla Cybertruck outside the Trump Hotel in Las Vegas.
An overnight shooting at a New York City nightclub heightened concern, while authorities said it was not linked to terrorism.
The VIX index, a measure of Wall Street stock sentiment, briefly jumped above 18. Readings above 20 indicate growing concern about near-term volatility.
In the coming months, growth expectations in Europe and China, the Federal Reserve’s policy path and Trump’s agenda will be among the most pressing items on traders’ radars.
European energy stocks outperformed after a sharp increase in natural gas prices as the region braced for freezing winter temperatures without Russian supplies delivered via Ukraine. The transit contract between the two warring nations expired on New Year’s Day, with no alternative available.
The euro fell to its lowest levels against the dollar in more than two years, reflecting concerns about European growth, US trade tariffs and monetary policy differences with the United States. Many strategists expect a drop in parity with the dollar or even lower this year.
In Asia, sentiment was weak, with Chinese stocks the worst performer as data pointed to a slowing economy and traders eyed higher tariffs. The MSCI Asia Pacific Stock Index fell for the third day out of the past four. Financial markets in Japan remained closed.
Elsewhere in commodities, oil rose after an industry report indicated that US crude inventories continue to shrink. A report issued by the American Petroleum Institute showed that inventories fell by 1.4 million barrels last week, which would be the sixth consecutive decline. Rose gold. Bitcoin extended its rally to a third day.
Main events this week:
Some key movements in the markets:
Stocks
-
The S&P 500 was down 0.5% as of 12:58 PM New York time
-
The Nasdaq 100 index fell 0.6%.
-
The Dow Jones Industrial Average fell 0.5%
-
MSCI World Index fell 0.4%
Currencies
-
The Bloomberg Dollar Spot Index rose 0.3%.
-
The euro fell 0.9 percent to $1.0263
-
The British pound fell 1.2 percent to $1.2371
-
The Japanese yen fell 0.2 percent to 157.56 yen to the dollar
Cryptocurrencies
-
Bitcoin rose 1.9% to $96,562.61
-
Ethereum rose 2.5% to $3,444.75
Bonds
-
The yield on the 10-year Treasury note rose one basis point to 4.58%.
-
The yield on 10-year German bonds rose one basis point to 2.38%.
-
The UK 10-year bond yield rose three basis points to 4.59%.
Goods
-
West Texas Intermediate crude rose 2.3% to $73.36 a barrel
-
Spot gold rose 1.2 percent to $2,656.11 per ounce
This story was produced with assistance from Bloomberg Automation.
-With assistance from Richard Henderson, Chiranjeevi Chakraborty, Cecil Goucher and John Viljoen.
Most read from Bloomberg Businessweek
©2025 Bloomberg LP