On the first trading day of 2025, US benchmark equity indexes experienced a downturn, with notable declines in the S&P 500 and the Nasdaq Composite primarily driven by a sell-off in Tesla shares. The technology-heavy Nasdaq reported a decline of 0.9%, settling at 19,137.5, while the S&P 500 and the Dow Jones Industrial Average fell by 0.7%, landing at 5,841.4 and 42,258.8 respectively.
The consumer discretionary sector faced the most significant drop, contrasting with the energy sector, which emerged as the only area of growth. Market activity paused on Wednesday due to the New Year's Day holiday, but the subsequent trading day revealed a challenging landscape for several companies.
Tesla's shares plummeted by 7.5%, marking the most considerable loss on both the S&P 500 and the Nasdaq. This downturn followed the electric vehicle manufacturer's disappointing year-over-year delivery figures for 2024, as the fourth-quarter results fell short of Wall Street's expectations. In the Dow Jones index, Boeing witnessed the largest loss, showing a decline of 3.5%, ranking as the second-largest decline on the S&P 500 as well. On a contrasting note, Constellation Energy announced a significant victory by securing a 10-year contract worth $840 million to provide electricity to over 13 federal government agencies.
This development positively impacted the company's shares, which surged by 5.5%, making them the top performer on the Nasdaq and the second-best on the S&P 500. From a financial perspective, the US 10-year yield saw a minor increase of one basis point, reaching 4.59%, while the two-year rate maintained a stable position at 4.26%. Economic indicators revealed that the contraction in the US manufacturing sector became more pronounced in December, suffering from declines in both output and new orders.
Market sentiment has plunged to levels not seen since August, as reported by S&P Global. In labor market news, weekly applications for unemployment insurance unexpectedly dropped last week, alongside a decrease in continuing claims. Despite the encouraging nature of this reduction, experts caution against complacency due to the high seasonal volatility typically observed during this period, as indicated by Jefferies in their communication to clients. Additionally, mortgage applications experienced a sharp decline over the two weeks ending December 27, coinciding with rising rates across all loan categories, according to the Mortgage Bankers Association. In commodity markets, West Texas Intermediate crude oil prices increased by 2.2% to $73.32 per barrel.
Meanwhile, gold prices climbed by 1%, settling at $2,666.90 per troy ounce, and silver saw an upturn of 2.2%, reaching $29.89 per ounce. In summary, as 2025 began, complexities in the market, particularly surrounding key players like Tesla and Boeing, coupled with concerning economic indicators, set a cautious tone for investors..