January 3, 2025

Markets

U.S. stock futures edged higher on Friday following a turbulent start to the new year.

The first trading session of January was marked by volatility as investors took profits on key 2024 winners like Apple and Tesla. The Dow closed down over 150 points, or 0.4%, while the S&P 500 and Nasdaq Composite slipped around 0.2% each. Earlier in the day, all three indices had been in positive territory, with the Dow climbing more than 300 points before retreating later in the session.

This performance follows a lackluster end to 2024, during which the S&P 500 recorded four straight days of losses—a trend not seen since 1966. Despite its strong 23% annual gain, the index fell 2.5% in December, and the much-anticipated "Santa Claus" rally failed to materialize.

While this week’s economic calendar lacks significant catalysts, investors will focus on Friday’s ISM Manufacturing Index and remarks from Federal Reserve officials Thomas Barkin and Mary Daly.

Meanwhile, in Asia, Chinese stocks extended their declines on Friday, diverging from gains in the broader Asia-Pacific region.

Portfolio

Based on overnight and premarket activity, yesterday's observations remain in play. While we are closely monitoring the action, we don’t anticipate full trading volume to return until Monday, which we believe will mark the true beginning of 2025’s trading momentum. However, as noted yesterday, significant positioning is underway, and the recent pullback is providing an entry point for a broader move higher. Technically, nothing has shifted, and this context is key to preparing for the opportunities ahead. For those analyzing charts, revisit early 2024 to observe a similar pattern of initial volatility before rallies across many sectors.

We enter todays session holding positions in TSLL and SOUN.   

Looking ahead to Monday, the first full trading week of 2025 will bring increased market engagement. Expectations include renewed focus on the administration, the kickoff of earnings season, and the Federal Reserve re-entering discussions. Sector rotations aligned with anticipated 2025 themes will likely gain traction. While subtle shifts are already underway, these will become more evident and widely reported.

The first quarter of a new year always offers unique opportunities driven by these intangibles. The momentum is building, and we are prepared to capitalize on this market and recover ground lost in recent weeks. Let's have a great session.