(For a Reuters live blog on U.S., UK and European stock

markets, click or type LIVE/ in a news window.)

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Weekly jobless claims at 211,000, below estimates

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Tesla down after deliveries data

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Crypto stocks rise on bitcoin strength

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Indexes up: Dow 0.26%, S&P 0.44%, Nasdaq 0.51%

(Updates with mid-session trading)

By Johann M Cherian and Purvi Agarwal

Jan 2 (Reuters) - Wall Street's main indexes edged

higher in the volatile first trading session of 2025 as

investors pinned their hopes on a fresh political landscape and

more interest rate cuts, while Tesla slid after a dour

deliveries report.

At 11:41 a.m. ET, the Dow Jones Industrial Average

rose 111.85 points, or 0.26%, to 42,656.07, the S&P 500

gained 25.69 points, or 0.44%, to 5,907.32 and the Nasdaq

Composite gained 98.75 points, or 0.51%, to 19,409.54.

The Russell 2000 index tracking small-cap stocks

also rose 0.9%.

Seven out of the 11 S&P 500 sectors advanced, led by energy

stocks, as oil prices ticked higher.

Tesla dropped 5.2% and touched a near one-month 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.

That weighed on the consumer discretionary sector,

pulling it 0.2% lower.

"The real issue is that the demand for (electric vehicles)

is lagging and we think the stock is massively overvalued, but

people want to own it because Trump and Musk are buddies," said

Jay Hatfield, CEO of Infrastructure Capital Advisors.

"But every once in a while, reality rears its head.. and you

have to report sales, so that can pop these momentum stocks a

little bit."

Thin trading volumes in the holiday-shortened week added

some volatility to markets, while the yield on the 10-year

benchmark Treasury note hovered near an eight-month

high.

On the data front, 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

commencing its interest rates easing cycle, investor hype around

artificial intelligence and expectations of pro-business

policies from the incoming Trump administration.

However, 2024's rally ended with the S&P 500 and the Dow

marking declines for December, as markets priced in inflationary

pressures from Trump's policy proposals and weighed the

likelihood of it hindering 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.

Equity valuations are sitting above their long-term

averages, but could be justified if corporate profits stay

strong.

Apple ( AAPL ) lost 2.2%. The iPhone maker offered rare

discounts of up to $68.50 on its latest iPhone models in China.

Crypto stocks such as MicroStrategy ( MSTR ) and MARA

Holdings ( MARA ) rose 4.2% each, tracking higher bitcoin

prices.

Advancing issues outnumbered decliners by a 2.88-to-1 ratio

on the NYSE and by a 2.32-to-1 ratio on the Nasdaq.

The S&P 500 posted one new 52-week high and 2 new lows while

the Nasdaq Composite recorded 44 new highs and 13 new lows.