US STOCKS-Wall St rises in first trading session of 2025; Tesla slides

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By Johann M Cherian and Purvi Agarwal

Jan 2 (Reuters) - Wall Street's main indexes rose in the first trading session of 2025 as investors pinned their hopes on a fresh political landscape and more interest rate cuts, but Tesla limited gains on the Nasdaq after a dour deliveries report.

At 09:56 a.m. ET, the Dow Jones Industrial Average .DJI rose 339.67 points, or 0.80%, to 42,885.17, the S&P 500 .SPX gained 43.93 points, or 0.75%, to 5,925.56 and the Nasdaq Composite .IXIC gained 158.61 points, or 0.82%, to 19,469.40.

An index tracking small-cap stocks .RUT also rose 1.4%.

Eight out of the 11 S&P 500 sectors advanced, led by energy .SPNY stocks, while real estate .SPLRCR dipped 0.1%.

Tesla TSLA.O, down 3.6%, touched an over three-week low after reporting its first fall in annual deliveries, missing CEO Elon Musk's promise of slight growth in 2024, as incentives failed to stem a decline in demand for its aging line-up of electric vehicles.

"You have to put the perspective of the total deliveries in total production against the fact that this is a stock that has had just an amazing performance in 2024," said Art Hogan, chief market strategist at B Riley Wealth.

"Post-election, any modicum of disappointing news might have an outsized impact on the stock's price."

The stock had soared after the U.S. election given Musk's close ties with President-elect Donald Trump.

Among the first datasets of 2025, a Labor Department report showed jobless claims unexpectedly fell last week, consistent with a healthy labor market. Separately, a final estimate of S&P Global's manufacturing survey showed activity stood at 49.4 in December, compared with a previous estimate of 48.3.

Wall Street's main indexes had a stellar 2024, with the benchmark S&P 500 notching its best two-year run since 1997-1998.

The main catalysts were the Federal Reserve easing interest rates for the first time since 2020, investor hype around artificial intelligence and expectations of companies potentially benefiting from Trump's policies.

Equity valuations are sitting above their long-term averages, but could be justified if corporate profits stay strong.

However, 2024's rally ended with the S&P 500 and the Dow posting monthly declines in December as markets priced in Trump's policy proposals to be inflationary and likely to slow down the Fed's policy easing pace this year.

With inflation still above the 2% target, traders see the central bank leaving interest rates unchanged at its meeting later this month, and expect borrowing costs to be lowered by about 50 basis points by year-end, according to the CME Group's FedWatch Tool.

Markets also weighed the likelihood that the new administration could issue more debt to finance its policies, which could worsen market volatility. The yield on the 10-year benchmark Treasury note US10YT=RR hovered near an eight-month high. US/

Among other megacaps, Meta META.O and Amazon.com AMZN.O added over 1.4% each, while chip stocks Nvidia NVDA.O and Broadcom AVGO.O climbed 1.6% and 2%, respectively.

Crypto stocks such as MicroStrategy MSTR.O and MARA Holdings MARA.O rose 6% and 7.8%, respectively, tracking higher bitcoin BTC= prices.

Advancing issues outnumbered decliners by a 5.29-to-1 ratio on the NYSE and by a 3.69-to-1 ratio on the Nasdaq.

The S&P 500 posted one new 52-week high and no new lows while the Nasdaq Composite recorded 30 new highs and 7 new lows.

(Reporting by Johann M Cherian and Purvi Agarwal in Bengaluru; Editing by Devika Syamnath)

((johann.mcherian@thomsonreuters.com;))