Reuters - A look at the day ahead in U.S. and global markets by Samuel Indyk

2025 has kicked off how 2024 ended: stocks are having a wobble and the dollar remains in charge as investors bet that Fed rate cuts will be few and far between this year.

Data on Thursday supported that view, with the number of Americans filing new applications for unemployment benefits dropping to an eight-month low last week.

A robust labor market should stamp out any near term expectations for rate cuts from the Fed, with lower borrowing costs now conditional on a worsening employment picture and softer inflation.

The chances of a cut at the Fed's January meeting stand at about 11%.

With U.S. rates expected to stay higher for longer, it's the dollar that reigns supreme.

The dollar index, albeit a touch softer on Friday, remains near its highest level in over two years, pushing the pound to multi-month lows and the euro ever closer towards parity.

On Thursday, the single currency fell to its lowest in over two years at $1.0225.

Europe remains unloved, for now, with the threat of U.S. import tariffs further weighing on sentiment.

The fourth quarter of 2024 marked the worst quarterly showing in more than two years for the pan-European STOXX 600.

And it's not just Europe that is showing signs of stress. Wall Street is wobbling too.

The S&P 500 couldn't hold onto gains on Thursday and fell for a fifth straight trading session, its longest losing streak since mid-April. The Nasdaq Composite also fell for a fifth straight day.

Wall St futures are higher before the bell on Friday as they look to end the holiday-disrupted week in the green before a big week next week, which include December's nonfarm payrolls report and flash inflation data from the euro zone.

Key developments that should provide more direction to U.S. markets later on Friday:

* ISM Manufacturing PMI

* EIA Natural Gas Storage Change

(Writing by Samuel Indyk; Editing by Christina Fincher)