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 about the stock market on January 24, 2025, written in simple language.

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### **A Bumpy Ride to a Big Win: Understanding the Stock Market on January 24, 2025**

Imagine a rollercoaster that climbs a huge hill, drops suddenly, but still ends the ride much higher than it started. That’s a good picture of what happened in the stock market on Friday, January 24, 2025.

The S&P 500, a key index that tracks 500 of America's biggest companies, closed the day slightly down, ending a streak of record highs. This was mainly because technology stocks, which had been soaring, took a step back. However, when you look at the entire week, the story is very different. All the major indexes—the S&P 500, the tech-heavy Nasdaq, and the Dow Jones (which tracks 30 major companies)—posted their biggest weekly gains in months.

This surge was largely driven by the political event of the week: Donald Trump's return to the White House.

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#### **1. Historical Background: From Bull Markets to Political Whiplash**

To understand why this day was significant, we need a little history.

* **The Long Boom:** For much of the late 2010s and 2020s, the stock market experienced a long "bull market," meaning prices generally kept going up. Technology companies like Apple, Google, and Amazon were the superstars, driving indexes like the Nasdaq to new heights.

* **The Role of Presidents:** Historically, stock markets don't have a strict political party preference. However, they do love **certainty and pro-business policies**. During his first term (2017-2021), President Trump implemented significant corporate tax cuts and reduced regulations. Markets often reacted positively to these policies, which boosted company profits.

* **The Pendulum Swings:** When President Biden took office, his administration focused on different priorities, like climate change and social spending. The market adjusted, with some sectors (like green energy) thriving while others (like traditional oil and gas) faced more challenges.

* **The 2024 Election:** Trump's return to the presidency signaled to many investors that the policy pendulum was swinging back. The expectation of a return to lower taxes and lighter regulation for businesses, especially in sectors like finance and energy, created a wave of optimism.

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#### **2. General Public Opinion: Why Many Investors Were Cheering**

For a large portion of the investing public, the week's events were seen as very positive. Here’s the common view:

* **Pro-Business Policies Are Back:** The dominant opinion is that a Trump administration will be good for corporate profits. If companies pay less in taxes and have fewer rules to follow, they can make more money, which theoretically makes their stock more valuable.

* **"The January Effect" on Steroids:** There's an old market saying about a "January effect," where stocks often rise in the first month of the year. This year, it was supercharged by a major political shift, creating a powerful wave of buying.

* **A Healthy Pause:** Many experts saw the Friday tech slump as a natural and healthy "breather." After such a strong run-up, it's normal for stocks to pull back a little. It doesn't necessarily mean the good times are over; it just means the market is catching its breath.

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#### **3. Counterarguments: The Other Side of the Coin**

Not everyone was celebrating. Skeptics and critics raised several important points:

* **Markets Hate Uncertainty:** While the election is over, a new administration brings its own form of uncertainty. How will new trade policies affect companies that rely on global supply chains? Could new immigration rules lead to labor shortages? This uncertainty can be bad for stocks in the long run.

* **Ignoring the Deficit:** The main criticism of the 2017 tax cuts was that they massively increased the U.S. national debt. Critics worry that another round of tax cuts without spending cuts could worsen the country's financial health, which might spook investors later.

* **The Tech Slump is a Warning:** The drop in tech stocks on Friday wasn't random. Some analysts believe that the expectations for these companies had become unrealistically high. If the new policies don't deliver the massive profits everyone is hoping for, a more significant downturn could happen.

* **Short-Term vs. Long-Term:** The big weekly gain might just be a short-term "sugar rush" based on excitement, not solid, long-term economic fundamentals. The real test will be whether the policies actually lead to sustainable economic growth.

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#### **4. Implications: What We Can Learn From This Week**

So, what does all this mean for the average person, whether they have money in the market or not?

* **Politics Moves Markets, But Doesn't Control Them:** This week was a clear lesson that political events can cause immediate and dramatic swings. However, over the long term, the market's health is more dependent on fundamental factors like corporate earnings, employment, and innovation.

* **Diversification is Your Best Friend:** The fact that tech stocks fell while other sectors (like banks and energy) rose is a perfect example of why it's smart not to put all your eggs in one basket. A diversified portfolio can help you weather the ups and downs of any single sector.

* **Don't Panic Over a Single Day:** January 24th teaches us not to overreact to one day of trading. A daily drop can happen even in the middle of a great week. Smart investing is about the long-term trend, not the daily headlines.

* **Stay Informed, Not Emotional:** The market is driven by two powerful forces: data and emotion. The best thing an investor can do is understand the facts, consider both the optimistic and skeptical views, and avoid making rash decisions based on fear or excitement.

**In conclusion,** January 24, 2025, was a day that perfectly captured the dynamic and often unpredictable nature of the stock market. It showed how political change can fuel optimism, why different sectors react in different ways, and, most importantly, why it's crucial to look beyond the headline of a single day to understand the bigger picture.