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

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 and formatted for easy reading.

***

### **A Bumpy Day After a Big Week: Understanding the Stock Market on January 24, 2025**

**January 24, 2025** – If you looked at the stock market on this Friday, you might have felt a twinge of worry. The S&P 500, a key measure of the U.S. stock market, closed down for the day, pulled lower by a slump in big technology companies.

But here’s the twist: despite that daily drop, the market had just finished one of its best weeks in recent memory. The S&P 500, the tech-heavy Nasdaq, and the Dow Jones Industrial Average all posted significant gains over the week.

So, what’s going on? The story isn't about a single day. It's about a major political shift and how investors are reacting to a familiar figure returning to the White House: Donald J. Trump.

---

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

To understand today, we need to look at yesterday. The stock market's relationship with presidential politics is long and complicated.

* **The Pre-2024 Landscape:** For years, the market was defined by ultra-low interest rates, which made borrowing cheap and fueled growth, especially in the technology sector. The COVID-19 pandemic accelerated the digital revolution, sending tech stocks to incredible heights.

* **The 2020-2024 Cycle:** During President Biden's term, the market grappled with high inflation. To combat it, the Federal Reserve raised interest rates aggressively. This made borrowing money more expensive, which often cools down the economy and can hurt stock prices, leading to a period of uncertainty and volatility.

* **The 2024 Election:** The return of Donald Trump to the presidency, following his victory in the 2024 election, represents a significant shift in policy expectations. Investors are now trying to price in what his known priorities—such as tax cuts, deregulation, and tough trade policies—will mean for companies and the economy.

---

#### **2. General Public Opinion: Why the Market Rallied This Week**

The strong weekly gain, despite Friday's dip, points to a wave of optimism from a large portion of investors. Here’s what they are thinking:

* **Hope for a Business-Friendly Environment:** Many investors believe a Trump administration will lead to lower taxes for corporations and individuals. If companies pay less in taxes, they keep more profit, which can boost their stock prices.

* **Expectation of Deregulation:** The thinking is that fewer rules for industries like energy, finance, and healthcare will reduce costs for companies and allow them to operate more freely, potentially increasing their earnings.

* **A Boost for "Old Economy" Stocks:** Sectors like banking, oil and gas, and defense, which struggled under the focus on tech and green energy, are expected to thrive. This is why the Dow, which includes many of these "traditional" companies, also saw a big weekly jump.

* **The "Buy the Rumor" Effect:** The market often moves in anticipation of future events. The entire week was a classic case of investors buying stocks based on the *expectation* of pro-business policies, driving prices up.

---

#### **3. Counterarguments: The Reasons for Friday's Slump and Lingering Worries**

Not everyone is celebrating. Friday's tech slump and the S&P 500 finishing below a record high reveal a different, more cautious perspective.

* **Fear of Trade Wars:** One of Trump's signature policies during his first term was imposing tariffs (taxes on imported goods). Critics worry that new tariffs could spark trade wars, raising costs for businesses and consumers and hurting the global economy, which would ultimately be bad for stocks.

* **Concerns Over National Debt:** Another round of large tax cuts, without corresponding spending cuts, could cause the national debt to balloon further. This might spook investors who are worried about the country's long-term financial health.

* **Why Tech Slumped:** The technology sector is particularly vulnerable to two things:

* **Trade Tensions:** Many tech companies rely on complex global supply chains and sell their products worldwide. Tariffs and trade disputes can severely disrupt their business.

* **Interest Rates:** If Trump's policies are seen as too stimulative and risk re-igniting inflation, the Federal Reserve might be forced to keep interest rates high for longer. High rates are typically bad for tech stocks, as they reduce the current value of their future earnings potential.

* **The "Sell the News" Effect:** This is the flip side of "buy the rumor." After a big rally, some investors decide to cash in their profits once the expected event (the inauguration) has happened, leading to a temporary dip like we saw on Friday.

---

#### **4. Implications: What This All Means for the Future**

The events of this week are a powerful lesson in how the stock market works. It’s not a monolith but a constant battle between optimism and fear.

* **Volatility is the New Normal:** Investors should brace for a rocky ride. The clash between pro-business hopes and fears of protectionism and debt will likely lead to more days like this—big swings up and down as new information and policies emerge.

* **Sector Rotation is Key:** The era where "all stocks go up" might be over. We may see money moving out of previous winners (like tech) and into other sectors (like energy and banks). This is known as "sector rotation," and it's a sign of a market adapting to a new political reality.

* **The Danger of Overreacting:** For the average person, the lesson is to avoid making drastic financial decisions based on a single day's headlines or even a single week's rally. The market's daily movements are often just noise.

* **The Long View Wins:** Historically, the stock market has trended upward over the long term through all kinds of political leadership. While new policies can create short-term winners and losers, a diversified, long-term investment strategy has consistently proven to be the most reliable path to building wealth.

**In summary, January 24, 2025, was a day that perfectly captured a market in transition—taking a breather after a euphoric sprint, but still fundamentally reshaped by the new political landscape in Washington.**

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