Markets Struggle Amid Debt Ceiling Worries and Broad Uncertainty
Markets Struggle Amid Debt Ceiling Worries and Broad Uncertainty
By:JJ Kinahan
Tesla deliveries decline As BYD gains ground. Gold and oil rise as safeguards against disruptions.
- Volatility persists as concern about strikes and the debt ceiling weigh on investor sentiment.
- Tesla faces challenges with declining deliveries while BYD gains ground in global EV market.
- Rising gold and oil prices reflect investors’ caution amid economic uncertainty and geopolitical risk.
Stocks began the year on a positive note, opening higher on the first trading day. However, early gains faded throughout the session, leaving the S&P 500 and Nasdaq Composite down 0.2%, while the Dow Jones Industrial Average declined nearly 0.4%. Small-cap stocks were the exception, with the Russell 2000 gaining 0.7%.
Despite those marginal moves, i ntraday trading ranges were notably wide, reflecting underlying market volatility.
EV competition heats up
Tesla emerged as one of the day’s notable laggards, with shares down 22% since Dec. 18, when they closed at $488.54. The electric vehicle (EV) maker reported a 1% decline in annual deliveries, marking its first year-over-year drop in nearly a decade.
In contrast, Chinese EV competitor BYD gained ground, delivering 1.76 million vehicles in 2024, a 12% increase year-over-year, including 515,000 in December alone. That underscores the increasing competition Tesla faces in the EV market.
Apple and U.S. Steel also made headlines. Apple agreed to a $95 million settlement over allegations of unauthorized data collection via Siri. Meanwhile, U.S. Steel shares are under pressure, indicated lower by nearly 10% in premarket trading, following reports that the Biden Administration plans to block Nippon Steel’s $14.9 billion acquisition of the company.
Disruptors on parade
One factor weighing on markets is the looming debt ceiling. After its suspension in June 2023, borrowing limits were reinstated this week. Congress faces a mid-January deadline to raise or suspend the ceiling to avoid default.
Adding to the uncertainty is a contentious vote to elect a Speaker of the House, with current speaker, Republican Mike Johnson of Louisiana, facing challenges in securing enough votes. Delays in leadership decisions may further complicate efforts to address the debt ceiling, amplifying market concerns.
Another potential economic disruptor is the looming strike by the International Longshoremen’s Association. If negotiations fail, dockworkers could strike as early as Jan. 15, potentially halting operations at ports along the East Coast and in Texas. Prolonged disruptions could exacerbate inflation, making this an issue to monitor closely.
Strong prices for gold and oil
Amid these uncertainties, gold and oil prices have been climbing. Gold gained nearly 1.5% on Thursday, reflecting its appeal as a safe haven. Oil, closing above $73 per barrel, has alleviated recession fears tied to its earlier decline.
As markets struggle to sustain rallies, traders anticipate potential capitulation selling, possibly setting the stage for a rebound. Patience and adherence to long-term investment plans remain crucial in navigating this environment.
JJ Kinahan is CEO of IG North America—which includes tastylive, tastytrade and IG's FX Business. Kinahan traded for 21 years at the Chicago Board Options Exchange. He serves on the CBOE Advisory Board and the SIFMA Options Committee. @thejjkinahan
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