U.S. stock futures showed modest gains late Wednesday, with Dow Jones, S&P 500, and Nasdaq futures all in the green as global markets opened the year. However, the stock market ended 2024 on a slightly weaker note, as the Nasdaq continued its decline for a fourth consecutive session, testing key support levels already breached by other major indexes.
Despite a strong overall performance in 2024, market sentiment was downbeat as stocks showed signs of weakness. Notable stocks such as CyberArk Software (CYBR), Nvidia (NVDA), and Tesla (TSLA) remained in focus as investors adjusted their positions amidst market uncertainty.
Stock Performance Heading Into 2025
CyberArk Software made a strong move on Tuesday, but recent purchases of the stock have faced challenges in the volatile market. Nvidia, which had briefly climbed above its 50-day moving average on Monday, fell modestly on Tuesday. Tesla saw its stock dip below a key technical level, although it rebounded slightly overnight as news emerged that the Tesla Cybertruck would qualify for tax credits. Tesla is also set to report its fourth-quarter and full-year production and delivery figures Thursday morning.
Chinese electric vehicle (EV) manufacturers, including BYD, XPeng, Li Auto, Nio, and Zeekr, all reported record monthly sales for December, with BYD surpassing Tesla in terms of fully electric battery vehicle (BEV) sales for the fourth quarter of 2024.
Nvidia, currently a hedged position on the IBD Leaderboard, and Tesla, which is on the Leaderboard watchlist, remain prominent stocks in the sector.
Global Economic Data
U.S. stock markets were closed on New Year’s Day, but overnight futures activity suggested positive movement heading into the first trading days of 2025. The Caixin China manufacturing index fell to 50.5, slightly missing expectations of 51.7, reflecting a weaker-than-anticipated economic outlook for China. This follows the release of a subpar official manufacturing report that indicated sluggish growth in the region.
Stock Market Trends: A Mixed Picture
The stock market rally quickly lost momentum, with the Nasdaq leading the declines. The Dow Jones Industrial Average slipped by about 0.1% on Tuesday, while the S&P 500 lost 0.4%, briefly falling below its 50-day moving average. The Nasdaq Composite dropped 0.9%, edging closer to its 50-day line, marking its lowest close since November 29.
The small-cap Russell 2000 managed to gain 0.1%, but its gains were tempered by resistance at the 10-day moving average.
2024 Market Recap
Despite the weaker finish, 2024 was a strong year for equities. The S&P 500 surged by 23.3%, following a 24.2% rise in 2023. The Nasdaq posted an impressive 28.6% gain in 2024, while the Dow Jones increased by 12.9%.
Growth ETFs saw varied performances: the Innovator IBD 50 ETF (FFTY) fell by 1.8%, while the iShares Expanded Tech-Software Sector ETF (IGV) lost 0.8%. The VanEck Vectors Semiconductor ETF (SMH), led by Nvidia, dropped by 1%.
Tesla and EV Market Outlook
Tesla is set to report its Q4 and full-year delivery numbers soon, with analysts expecting a record-breaking 500,000 deliveries in Q4. Elon Musk had earlier forecast that Tesla would exceed 1.8 million deliveries for 2024. To hit this target, the company would need to report approximately 515,000 deliveries for Q4, supported by discounts and incentives to drive demand in key markets, particularly China.
Tesla’s much-anticipated Cybertruck, which starts at $79,990, appears to be eligible for the $7,500 IRA tax credit, though Tesla’s website has not yet updated the information. Despite slow sales in Q4, the qualification for tax credits could help boost demand. Tesla’s stores in China have also started taking orders for an updated Model Y, with production ramping up at the Shanghai plant.
Tesla stock experienced a 3.25% decline on Tuesday, its fourth consecutive loss, but still posted a 62.5% gain in 2024, largely fueled by optimism surrounding the company’s self-driving, AI, and robotics initiatives.
Chinese EV Companies Post Record Sales
Chinese EV manufacturers also reported robust sales in December, setting new monthly and quarterly records. BYD led the charge with 514,809 units sold in December, while other manufacturers like Li Auto, XPeng, and Nio also saw impressive results. Li Auto topped 500,000 units for 2024, and XPeng exceeded its Q4 target, benefiting from strong demand for models like the P7+.
For the full year, BYD delivered a total of 4.27 million vehicles, a 41.3% increase, surpassing its target of 4 million vehicles. However, BYD’s passenger BEVs are expected to fall just short of Tesla’s total deliveries for the year.
Investor Strategy Amid Market Volatility
As the stock market navigates through a choppy start to 2025, investors should remain cautious. While stocks may flash buy signals, the market’s unpredictable nature suggests that these gains could quickly fade. Investors are advised to trim positions in struggling stocks and focus on building watchlists with stocks demonstrating relative strength.
The first few trading days of the year could see tax-related selling pressure, particularly on the Nasdaq, as investors adjust their portfolios. As volume picks up and investors return from the holiday season, more clarity may emerge on the market’s direction for the coming months.
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