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

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### **A Bumpy Ride to New Heights: Understanding the Stock Market on January 24, 2025**

If you looked at the stock market headlines on Friday, January 24, 2025, you might have felt confused. On one hand, the market had a bad day. On the other, it just finished one of its best weeks in a long time.

Let's break down what happened, why it matters, and what it tells us about how the world of investing works.

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#### **1. What Happened? A Tale of Two Days**

The simple story is this: The S&P 500 (an index that tracks 500 of the biggest U.S. companies) closed the day slightly down, falling just below its all-time record high. The main reason was a slump in big technology stocks like Apple, Microsoft, and Google.

However, when you zoom out and look at the entire week, the picture is completely different. All the major indexes—the S&P 500, the Nasdaq (which is heavy on tech), and the Dow Jones (which tracks 30 major companies)—posted huge gains for the week.

**The Catalyst:** This powerful weekly surge was largely triggered by the January 20th inauguration of Donald Trump, who returned to the White House for a second term. Investors were betting that his administration's policies would be good for business.

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#### **2. Historical Background: The Rollercoaster of Markets and Politics**

To understand why a presidential inauguration can move the markets so much, we need a little history.

* **The Market's Long-Term Climb:** Over the past 100 years, despite many wars, recessions, and crises, the U.S. stock market has generally trended upward. This is because the economy grows over time, and companies become more valuable.

* **The Impact of Presidential Policies:** Different presidents have different priorities. Policies on taxes, government spending, and business regulations can directly affect company profits. For example:

* **Tax Cuts:** If a president lowers taxes for companies, they get to keep more of their money, which can lead to higher stock prices.

* **Deregulation:** If a president reduces rules on industries like energy or finance, it can lower costs for those companies and boost their earnings.

* **The "Trump Trade":** During his first term (2017-2021), President Trump enacted significant corporate tax cuts. Many investors remembered this and, anticipating similar policies in his second term, started buying stocks aggressively, leading to the big weekly gain.

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#### **3. General Public Opinion: Why Investors Were Cheering**

The common view among many investors and financial experts after the inauguration was one of optimism. This optimism was based on a few key expectations:

* **Pro-Business Policies:** The belief that the new administration would create a favorable environment for companies to thrive.

* **Economic Growth:** Hopes for stronger economic growth, driven by potential tax cuts and increased government spending on infrastructure.

* **Simplicity:** For many, it's a simple equation: "Business-friendly government = higher company profits = rising stock prices."

This widespread optimism is what fueled the buying frenzy throughout the week.

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#### **4. Counterarguments: A Word of Caution**

Not everyone was buying into the hype. Skeptics and cautious investors pointed out several reasons for concern:

* **Markets Hate Uncertainty:** A new administration, regardless of who it is, brings unknowns. Changes in trade policy or international relations could disrupt global business.

* **"Buy the Rumor, Sell the News":** This is an old market saying. It means that investors often buy stocks in *anticipation* of an event (the "rumor" of new policies) and then sell to lock in profits once the event actually happens (the "news" of the inauguration). The tech slump on January 24th might have been a classic case of this.

* **Overvaluation Worries:** Some analysts worried that the rapid rise in stock prices, especially in tech, had made them too expensive too fast, setting the stage for a potential pullback.

* **The Bigger Picture:** The stock market is influenced by much more than just who is president. Factors like the decisions of the Federal Reserve (which controls interest rates) and the global economic health are often more powerful long-term drivers.

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#### **5. Implications and Lessons Learned**

So, what can we learn from this eventful week in the market?

* **Don't Overreact to Single Days:** The market's daily ups and downs are often just "noise." The long-term trend is far more important than any single day's performance. A down day after a great week is normal and healthy.

* **Politics Moves Markets, But Not Forever:** Political events can cause short-term spikes or dips, but the market's ultimate direction is determined by the health and earnings of the companies that make it up.

* **Diversification is Key:** The fact that tech stocks slumped while other parts of the market held steadier is a perfect example of why it's smart to spread your investments. Don't put all your eggs in one basket.

* **Stay Informed, Not Emotional:** The best investors make decisions based on research and long-term goals, not on the excitement or fear of the moment.

**In conclusion,** January 24, 2025, serves as a powerful reminder that the stock market is a complex system. It reacts to politics, emotions, and economic fundamentals all at once. While the return of a business-friendly president provided a jolt of confidence, the market's underlying mechanics—profit, growth, and value—will always be the true engines that drive it forward.