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U.S. stocks off to solid start in 2025

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U.S. yields ease but 10-year still above 4.5%

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Dollar continues recent strength, hits 2-year high

(Updates with open of U.S. markets)

By Chuck Mikolajczak

NEW YORK, Jan 2 (Reuters) - Global stocks advanced on

Thursday after a four-session drop to end 2024, while the dollar

strengthened after economic data pointed to a U.S. labor market

that remained on solid footing.

On Wall Street, U.S. stocks were higher in the early stages

of trading, with the S&P 500 on track to snap a four session

streak of declines to end 2024.

Data from the U.S. Labor Department showed the number of

Americans filing new applications for unemployment benefits

dropped to an eight-month low of 211,000 last week, below the

222,000 estimate of economists polled by Reuters.

Gains were led by the energy and communication

services sectors, which each rose by more than 1%.

"Investors are hopeful that a goldilocks scenario will be

the story of 2025, amid promises of lower taxes and the

deregulation under a second Trump presidency," said Susannah

Streeter, head of money and markets at Hargreaves Lansdown.

The Dow Jones Industrial Average rose 115.48 points,

or 0.26%, to 42,655.29, the S&P 500 rose 21.65 points, or

0.38%, to 5,903.94 and the Nasdaq Composite rose 80.30

points, or 0.43%, to 19,393.01.

European stocks rose modestly after a sluggish start to the

session, also buoyed by energy names.

MSCI's gauge of stocks across the globe

1.84 points, or 0.23%, to 843.38 and was on track for its

biggest daily percentage gain since Dec. 24. Europe's STOXX 600

index rose 0.3%.

The dollar jumped to a two-year high on Thursday, building

on the strong gains from the prior year as expectations remained

intact that growth in the U.S. economy will outpace that of its

peers, keeping the Federal Reserve on a slower rate cut path and

interest rates elevated.

The dollar index, which measures the greenback

against a basket of currencies including the yen and the euro,

rose 0.46% to 109.04 after climbing to 109.12, its highest since

Nov. 10, 2022.

"In terms of 2025 economic growth, there's no rival to the

dollar," Adam Button, chief currency analyst at ForexLive in

Toronto, said.

"Capital flows dominate the turn of the year and the U.S.

stock market has really put to shame every other global market,"

Button added. "The dollar is the only game in town until there

is a genuine stumble in the U.S. economy."

The euro was down 0.63% at $1.029 after slumping to

$1.028, its lowest since Nov 22, 2022.

Against the Japanese yen, the dollar strengthened

0.06% to 156.97. Sterling weakened 1.13% to $1.2376 and

was on pace for its biggest daily percentage drop since Nov. 6.

Stocks had stumbled heading into the end of the year,

denting a year-long rally fueled by growth expectations

surrounding artificial intelligence, anticipated rate cuts from

the Federal Reserve, and more recently, the likelihood of

deregulation policies from the incoming Trump administration

ahead of the Jan. 20 inauguration.

However, the recent economic forecast from the Fed, along

with worries that President-elect Donald Trump's policies such

as tariffs may prove to be inflationary, have sent yields higher

and created a stumbling block for equities.

The yield on benchmark U.S. 10-year notes fell

3.6 basis points to 4.541%, but remained above the 4.5% mark

that analysts see as a problematic level for stocks.

Oil prices advanced, with U.S. crude up 2.38% to

$73.44 a barrel and Brent climbed to $76.32 per barrel,

up 2.25%, on optimism over China's economy and fuel demand after

a pledge by President Xi Jinping to promote growth.