Stock Market on Jan. 24, 2025: S&P 500 ends below record high as tech slumps, but posts big weekly gain along with Nasdaq and Dow after Trump's return to White House - MarketWatch

Of course. Here is a detailed and insightful article based on your request.

***

### **A Surprising Week on Wall Street: Tech Stumbles, But Markets Still Celebrate**

**January 24, 2025** – In a classic case of "look at the week, not the day," the U.S. stock market closed a turbulent but ultimately victorious week. The S&P 500 index dipped slightly on Friday, ending just below its all-time high, pulled down by a sudden slump in major technology stocks. However, this small daily loss did little to overshadow a powerful weekly surge.

For the week, the numbers were impressive:

* **The Dow Jones Industrial Average** rose significantly.

* **The tech-heavy Nasdaq Composite** posted a major gain.

* **The broad S&P 500** secured one of its best weekly performances of the young year.

This remarkable turnaround is widely attributed to a single, monumental event in Washington D.C.: the inauguration of Donald J. Trump for his second non-consecutive term as President.

---

#### **1. Historical Background: From Bitter Election to Bullish Bets**

To understand this week's market move, we need to rewind a few months.

The 2024 U.S. presidential election was one of the most closely watched events by investors around the world. Markets generally dislike uncertainty, and the possibility of a contested result or major policy shifts had kept many investors cautious throughout the campaign.

The connection between Trump's policies and the stock market has historical roots. During his first term (2017-2021), his administration pursued key policies that many investors loved:

* **Corporate Tax Cuts:** The Tax Cuts and Jobs Act of 2017 significantly lowered the tax bill for companies, which often leads to higher profits and, theoretically, higher stock prices.

* **Deregulation:** His administration rolled back rules in various sectors like finance and energy, which companies argued reduced their costs and made it easier to do business.

* **Tough Trade Stance:** While his tariffs on Chinese goods created some volatility, they were also seen by some as a way to protect American industries.

When Trump secured his return to the White House in November 2024, investors who remembered this playbook began to bet on history repeating itself. This "anticipation rally" started immediately after the election and built momentum right up to Inauguration Day.

---

#### **2. General Public Opinion: A Market Basking in Optimism**

The dominant mood on Wall Street this week has been one of strong optimism. The common view is that a second Trump term will be good for business and, by extension, the stock market.

The main reasons for this cheerfulness include:

* **Expectation of More Tax Cuts:** There is a strong belief that the new administration will push for another round of tax reductions, putting more money directly into corporate coffers and consumers' pockets.

* **Pro-Business Environment:** Investors expect a continued push for lighter regulation, particularly in the energy and banking sectors, which could boost their profits.

* **Taming Inflation:** The hope is that policies aimed at boosting domestic energy production (like oil and gas drilling) will help lower energy costs and bring down persistent inflation, which would be good for all stocks.

For many everyday investors with 401(k) plans, the weekly gain is a welcome sight. It reinforces the idea that the market can thrive under political change and that the long-term trend for stocks remains upward.

---

#### **3. Counterarguments: Reasons for Caution Amid the Celebration**

Not everyone is joining the party. Skeptics and financial experts urge caution, pointing out several potential pitfalls.

* **The "Buy the Rumor, Sell the News" Effect:** Some analysts warn that the big weekly gain was just the market "pricing in" all the good news ahead of time. Now that the inauguration is over, investors might start taking profits, leading to a pullback. Friday's tech slump could be an early sign of this.

* **Trade Wars and Uncertainty:** Trump's first term was marked by turbulent trade negotiations and tariffs. A return to aggressive trade policies could disrupt global supply chains, increase costs for companies that import goods, and spark inflation rather than curb it.

* **Interest Rates and the Fed:** The independent Federal Reserve's main job is to control inflation. If the government's policies cause the economy to overheat, the Fed might be forced to keep interest rates high for longer, which is typically bad for stock prices.

* **The Tech Slump is a Warning:** The fact that tech stocks—the market's leaders for years—stumbled on Friday is a notable red flag for some. It suggests that not all sectors may benefit equally from the new political climate.

In short, the counterargument is that the market may have moved too far, too fast, based on hopes rather than certainties.

---

#### **4. Implications: What This Week Teaches Us**

This rollercoaster week offers several important lessons for investors, both new and experienced.

* **Politics Drives Short-Term Volatility:** The election and inauguration clearly show that political events can cause sharp, immediate swings in the market. It's a powerful reminder that the market is not just about company profits, but also about investor emotion and expectation.

* **Don't React to Daily Headlines:** The key takeaway is the difference between the daily dip and the weekly gain. A savvy investor looks at the bigger picture and long-term trends rather than panicking over a single day's negative news.

* **Diversification is Key:** The tech slump on the same day the overall market had a great week highlights why it's dangerous to put all your eggs in one basket. A diversified portfolio across different sectors can help smooth out these bumps.

* **Hope vs. Reality:** The market is now betting on a specific set of pro-growth policies. The coming months will be crucial. If the administration delivers on tax cuts and deregulation quickly, the rally could continue. If those policies get stalled in Congress or have unintended negative consequences, the market could be in for a correction.

**The Bottom Line:**

The market ended January 24th with a mix of short-term caution and medium-term hope. While records were briefly touched, the path forward remains tightly wound around Washington D.C. The promise of a business-friendly era has fueled a impressive rally, but the real test of whether hope can become reality is just beginning. For now, investors are enjoying the gains but watching the news out of the capital very, very closely.