Stocks Gain as Dip Buyers Power Rally in Big Tech: Markets Wrap

(Bloomberg) — A rally in the world’s largest tech companies lifted stocks at the start of the first full trading week in 2025. The dollar trimmed losses as President-elect Donald Trump said his tariff plan won’t be pared back.

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Equities continued to gain traction after a rout in the final stretch of last year, with the S&P 500 up over 1% on Monday. Nvidia Corp. led megacaps higher, jumping 5% toward a record ahead of chief Jensen Huang’s speech. Banks climbed on deregulation optimism, with Michael Barr stepping down as the Federal Reserve’s vice chair for supervision. The news also fueled a steepening of the Treasury curve, with shorter maturities outperforming.

The trading desk of JPMorgan Chase & Co. led by Andrew Tyler said while risks to stocks’ fierce rally are mounting, a bearish downturn remains “extremely unlikely” amid strong economic growth. Gains in US stocks this year will be driven mainly by corporate earnings, according to Goldman Sachs Group Inc.’s David Kostin, who expects the S&P 500 to hit 6,500 by year-end.

“The recovery we’ve seen Friday and today shows just how strong the ‘buy the dip’ mentality still is,” said Mark Hackett at Nationwide. “Investors continue to lean heavily on tech. Looking ahead, 2025 won’t be a year for easy double-digit gains by solely investing in the S&P 500. Success in this market will require more discipline and creativity from investors.”

The S&P 500 rose 1.1%. The Nasdaq 100 added 1.5%. The Dow Jones Industrial Average gained 0.7%. A gauge of the “Magnificent Seven” megacaps” climbed 2.1%. Citigroup Inc. also jumped on a bullish analyst call. Tencent Holdings Ltd. depositary receipts slid as the Defense Department designated it a Chinese military company operating in the US.

The yield on 10-year Treasuries advanced one basis points to 4.61%. The Bloomberg Dollar Spot Index fell 0.6%. The loonie held gains as Prime Minister Justin Trudeau is resigning after more than nine years leading Canada. Bitcoin topped $100,000.

“The oversold rally that drove impressive intraday gains and stronger breadth readings last Friday looks to continue,” said Dan Wantrobski at Janney Montgomery Scott. “Market breadth/participation will see mean reversion higher in the coming sessions — driving the rally efforts we are currently experiencing.”

Paul Nolte at Murphy & Sylvest Wealth Management says 2025 should see a volatile market.

“The large swings may provide opportunities for both buyers and sellers,” he noted.

The S&P 500’s December pullback didn’t prevent clients from being net buyers in nine of 11 sectors last month, according to Chris Larkin at E*Trade from Morgan Stanley.

“While there may have been a defensive element to some of the buying in utilities and real estate, the push into the consumer discretionary sector suggested more of a ‘risk-on’ mindset — led by purchases of TSLA and AMZN,” he noted.

Traders are also gearing up for Friday’s jobs report, which is expected to show employers tempered hiring to wrap up a year of moderating yet still-healthy labor market. The data is unlikely to alter the view of Federal Reserve officials that they can slow the pace of rate cuts amid a durable economy and inflation that’s dissipating only gradually.

Fed Governor Lisa Cook said Monday that policymakers can proceed more cautiously amid a sturdy labor market and lingering inflation pressures.

US stocks are becoming rate sensitive again, with breadth turning narrow after the US 10-year Treasury yield rose above 4.5%, according to Morgan Stanley strategists led by Michael Wilson.

“In order to see the return of a ‘good is good’ backdrop where hotter economic data drives upside in stocks even amid higher rates, we likely need to see more convincing evidence that animal spirits are inflecting and translating into stronger economic activity,” the strategists wrote.

Meantime, Lori Calvasina at RBC Capital Markets says investor exuberance in the stock market is starting to “self-correct” as a measure of sentiment and positioning fell into the year end.

“While this doesn’t tell us that the recent period of malaise in the stock market is over, we do think this deterioration in sentiment is actually good news for the stock market longer term,” they wrote.

Corporate Highlights:

American Airlines Group Inc. was upgraded to buy from hold at TD Cowen, Jefferies and Melius.
Uber Technologies Inc. said it entered into an accelerated share repurchase agreement with Bank of America to repurchase $1.5 billion of shares of Uber common stock, as part of its previously announced share repurchase authorization.
Qualcomm Inc. introduced new chips designed to power personal computers capable of running the latest artificial intelligence software yet cost as little as $600.
Carvana Co. said it has reestablished an agreement with Ally Financial Inc. to sell the lender up to $4 billion in used-vehicle loan receivables over the next year, a move that counters one claim by short seller Hindenburg Research that the financier was pulling back on their relationship.
Walt Disney Co. and streaming provider FuboTV Inc. agreed to combine their online live TV businesses, creating the second-biggest digital pay-TV provider.
Paychex Inc. is in advanced talks to acquire Paycor HCM Inc., a smaller rival in payroll processing, according to people with knowledge of the matter.
Nippon Steel Corp. and United States Steel Corp. jointly filed a pair of lawsuits in a last-ditch effort to preserve their planned merger, which was blocked last week by President Joe Biden.
Hon Hai Precision Industry Co. reported faster-than-expected 15% revenue growth after the server assembly partner to Nvidia rode sustained demand for AI infrastructure.

Key events this week:

Eurozone CPI, unemployment, Tuesday
US job openings, trade, ISM services, Tuesday
Fed’s Thomas Barkin speaks, Tuesday
Eurozone PPI, consumer confidence, Wednesday
US ADP employment, Fed minutes, consumer credit, Wednesday
Fed’s Christopher Waller speaks, Wednesday
China CPI, PPI, Thursday
Eurozone retail sales, Thursday
US state funeral and national day of mourning for former President Jimmy Carter is a federal holiday, Thursday
Fed’s Patrick Harker, Thomas Barkin, Jeff Schmid speak and Michelle Bowman, Thursday
Japan household spending, leading index, Friday
US jobs report, consumer sentiment, Friday

Some of the main moves in markets:

Stocks

The S&P 500 rose 1.1% as of 12:37 p.m. New York time
The Nasdaq 100 rose 1.5%
The Dow Jones Industrial Average rose 0.7%
The MSCI World Index rose 1.1%
Bloomberg Magnificent 7 Total Return Index rose 2.1%

Currencies

The Bloomberg Dollar Spot Index fell 0.6%
The euro rose 0.7% to $1.0384
The British pound rose 0.7% to $1.2511
The Japanese yen fell 0.2% to 157.55 per dollar

Cryptocurrencies

Bitcoin rose 3.3% to $101,759.73
Ether rose 1.1% to $3,686.76

Bonds

The yield on 10-year Treasuries advanced one basis point to 4.61%
Germany’s 10-year yield advanced two basis points to 2.45%
Britain’s 10-year yield advanced two basis points to 4.61%

Commodities

West Texas Intermediate crude fell 0.3% to $73.71 a barrel
Spot gold fell 0.2% to $2,636.13 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Andre Janse van Vuuren, Allegra Catelli, Julien Ponthus and Catherine Bosley.