Traders work on the floor of the New York Stock Exchange (NYSE) on the first trading day of the new year on January 2, 2025 in New York.
Spencer Platt | Getty Images
This report is from today's CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors the latest news wherever they are. Like what you see? You can subscribe Here.
What you need to know today
US markets start the year in the red
American stock exchanges started the year in a bad mood, including: all major indices are falling on Thursday, giving up earlier gains. The US Dollar Index reached its highest level in over two years. Pan-European Stoxx 600 the index added 0.6%, making up for previous losses. Oil and gas shares rose 2.3%, although the European banking index lost 0.3%.
Tesla Deliveries Reverse Gains
Shares Tesla fell 6.1% after the company reported fourth-quarter 2024 total deliveries decreased from year to year. Not only was this the first annual drop in Tesla deliveries, but it was also lower than expected, according to consensus estimates from StreetAccount. Deliveries are the closest approximation to sales reported by Tesla.
Meta's new president for global affairs
Meta replaces its president of global affairs Nick Clegg, a former British deputy prime minister, with Joel Kaplan, current vice president of corporate policy and a former Republican Party staffer. It's a sign of what tech companies are like positioning yourself for the future administration of US President-elect Donald Trump in Washington.
Gas from Russia stops flowing
Ukraine stopped the flow of Russian gas to several European countries on New Year's Day a widely expected moveRussian state energy giant Gazprom confirmed on Wednesday. European Commission he said has worked to ensure that the 27-nation bloc is prepared for such a scenario – although some countries are at greater risk than others.
(PRO) Moods close to euphoria
Investor optimism only increased despite the difficult end to December. Barometer tracked by Bank of America indicates that investor sentiment is close to euphoria – but on the contrary, signal to sell. Savita Subramanian, the bank's capital and quantitative strategy specialist, explains what this means for investors.
The most important thing
As the first trading day of the year opened, all major indexes gained in value, giving hope that stock markets can start 2025 bright and cheerful.
But like employees interrupting their New Year's celebrations and glumly marching back to the office, the stock lost its luster, began to decline and ended the session lower.
The Dow Jones Industrial Average retreated by 0.36%, i.e S&P500 decreased by 0.22%, a Nasdaq Composite lost 0.16%. Their loss on Thursday means the S&P and Nasdaq have closed in the red for five straight sessions, the longest losing streak since April.
The likely culprit? Rising yields on treasury bonds. After the initial immersion, Yield of 10-year treasury bonds started to grow and at 12:00 US time it was close to 4.6%. This coincided with the moment when the company's shares began to fall: the S&P 500 lost about 60 points between 12:00 and 13:00
Even though the 10-year yield eventually stabilized at the end of the day, persistently high yields pose a risk to stocks because they represent a safer place for investors to hide their cash. When Treasury bonds can provide a guaranteed return of 4.6%, the risk of betting on stocks seems less attractive.
Treasury securities may be even more attractive this year because analysts do not expect the S&P to return to the 23.31% gain in 2024. It is more likely to grow by 9% in 2025, on average, at the median CNBC Market Strategist Survey released in December.
In such a context, stocks may not adequately compensate investors for the risk they assume in owning bonds.
As Max Kettner HSBC chief multi-asset strategist wrote in a note Thursday: “The Fed's hawkish turn is pushing yields further higher, triggering what we call the Danger Zone.”
That said, Kettner believes that the current market volatility “should create attractive entry points, given that fundamentals remain solid – we think (the first half of 2025) will provide a suitable Goldilocks situation.”
Even a highway leading into a danger zone must eventually lead beyond it to another destination.
— CNBC's Lisa Kailai Han, Sarah Min, Jesse Pound and Christina Cheddar Berk contributed to this report.