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 event you described, written in simple language.

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

January 24, 2025, was a day of mixed signals for the stock market. If you just looked at the day's results, you might have thought investors were having a bad day. But if you zoomed out to see the whole week, the picture was overwhelmingly positive. Let's break down what happened and why.

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#### **1. What Actually Happened?**

On that Friday, the S&P 500—a basket that represents 500 of the biggest U.S. companies—closed a bit lower, slipping just below its all-time record high. The main reason? A "slump" in technology stocks. Companies like those in big tech and AI saw their stock prices dip.

However, this small daily drop hid a much bigger story. For the entire **week**, the market had a huge rally. All the major indexes—the S&P 500, the tech-heavy Nasdaq, and the Dow Jones (which tracks 30 major industrial companies)—posted significant gains.

The trigger for this weekly surge was a major political event: **Donald Trump's return to the White House** after winning the 2024 presidential election.

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#### **2. Historical Background: The Market and the President**

To understand why the market reacted this way, we need a little history.

* **The Pre-Trump Era:** Before Trump's first term (2017-2021), the stock market was already in a long period of growth that started after the 2008 financial crisis.

* **The First Trump Term:** When Trump first became president, the market reacted very positively. Investors were excited about his pro-business policies, which included:

* **Corporate Tax Cuts:** Lower taxes for companies, which can lead to higher profits.

* **Deregulation:** Reducing rules on businesses, which can make it easier and cheaper for them to operate.

* **The Interim Years:** The presidency that followed saw different priorities, focusing more on social spending and climate policy. While the market had its ups and downs, many business leaders wondered if the pro-business environment of the Trump years would return.

* **The 2024 Election:** Trump's return to power signaled to many investors that the policies of his first term—particularly lower taxes and lighter regulation—were coming back. This created a wave of optimism, leading to the big weekly gain.

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#### **3. General Public Opinion: Why Were People Optimistic?**

The general feeling among many investors and financial experts after the election was one of excitement. Here’s why:

* **Pro-Business Policies:** The expectation of renewed tax cuts and deregulation is like giving a booster shot to corporate profits. When companies are expected to make more money, their stocks become more valuable.

* **Economic Growth:** The belief is that these policies will stimulate the overall economy, leading to more jobs, higher consumer spending, and a thriving business environment.

* **"Buy the Rumor":** There's an old saying on Wall Street: "Buy the rumor, sell the news." In this case, the "rumor" was the expectation of future pro-business policies. Investors were buying stocks *in anticipation* of good things to come, which drove the market up all week.

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

Not everyone was celebrating. Some experts and investors urged caution, pointing out several potential problems:

* **The Tech Slump is a Warning:** The fact that tech stocks fell on the very day the weekly rally ended is a red flag for some. The tech industry relies heavily on global trade and immigrant talent. If the new administration introduces tough trade tariffs or immigration restrictions, it could hurt these companies.

* **Inflation Concerns:** Stimulating an already strong economy with tax cuts and spending could overheat it. This can cause **inflation** (prices for goods and services rising too quickly), which might force the Federal Reserve to raise interest rates. Higher rates make it more expensive for companies to borrow and grow, which is bad for stocks.

* **Uncertainty and Volatility:** A major shift in policy creates uncertainty. While the market likes pro-business policies, it hates surprises. The potential for sudden trade wars or regulatory changes can make the market very jumpy, as seen on that Friday.

* **It's Too Soon to Tell:** Critics argue that the market is just reacting to a headline and hasn't yet seen any actual policies become law. The rally, they say, might be based more on emotion than solid economic facts.

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#### **5. Implications: What Does This Mean for the Future?**

The events of the week ending January 24, 2025, teach us several important lessons about the stock market:

* **Look at the Big Picture:** A single day's performance doesn't tell the whole story. Always consider the broader trend (like the weekly gain) to understand the real momentum.

* **Politics Moves Markets:** Government policy has a direct and powerful impact on Wall Street. A change in leadership can create immediate waves of optimism or fear.

* **Different Sectors, Different Reactions:** The slump in tech stocks amid a broader rally shows that not all parts of the market are the same. Policies that help manufacturing or energy might not be as good for technology.

* **Prepare for Bumps:** The initial excitement after a major event often leads to a "honeymoon period" for the market. However, as reality sets in and policies are debated and implemented, volatility is almost guaranteed. The dip on January 24th might be a preview of this bumpy road ahead.

**In conclusion,** the stock market on January 24, 2025, was a tale of two timelines: a cautious end to the day, but a roaringly optimistic week. It perfectly illustrated how investor sentiment, driven by political change, can create powerful market movements, while also reminding us that sustained growth depends on turning promises into stable, effective policies.