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 steeply all week, has a sudden drop at the very end, but still finishes much higher than where it started. That’s exactly what happened in the stock market on Friday, January 24, 2025.

On that day, the **S&P 500**—a basket that represents 500 of America's biggest companies—closed down, slipping just below its all-time high. The main reason? A slump in big technology stocks. However, when you looked at the entire week, the story was completely different. The S&P 500, along with the **Nasdaq** (which is heavy on tech) and the **Dow Jones** (which tracks 30 major industrial companies), all posted their biggest weekly gains in months.

The catalyst for this surge? The political event of the week: **Donald Trump's return to the White House** for a second term.

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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 years, especially after the 2020 pandemic, the stock market experienced a historic "bull market," meaning prices kept going up for a long time. Technology companies like Apple, Microsoft, and Google were the superstars, driving the major indexes to record after record.

* **The Role of Interest Rates:** During this period, the Federal Reserve (the US central bank) kept interest rates very low. Think of low rates as cheap fuel for the economy—it makes it easier for companies to borrow money and grow, and it makes stocks more attractive to investors.

* **Politics and the Market:** The market has always reacted to presidential elections. During Trump's first term (2017-2021), markets generally performed well, fueled by policies like corporate tax cuts and deregulation (removing business rules). Investors came to associate his administration with a "pro-business" environment.

So, when Trump won the 2024 election and was inaugurated on January 20, 2025, many investors expected a repeat of those policies. This anticipation is what sent the market soaring for most of the week.

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

For a large portion of the investment world, Trump's return was seen as a clear positive. Here’s what the common, optimistic view looked like:

* **Expectation of Tax Cuts:** Many believed his administration would push for another round of corporate tax cuts. When companies pay less in taxes, they keep more profit, which can make their stocks more valuable.

* **Fewer Business Regulations:** The hope was that reducing rules on industries like energy and finance would lower their costs and allow them to operate more freely, potentially boosting their earnings.

* **A "Strong America" Focus:** Policies aimed at boosting US manufacturing and re-negotiating trade deals were seen as beneficial for certain US companies, especially in industrial and energy sectors.

This wave of optimism is why the Dow and S&P 500, which include many industrial and banking companies, had such a strong week. The "Trump Trade" was back in fashion.

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

However, not everyone was celebrating. By Friday, January 24th, a sense of caution crept in, leading to the tech slump and the slight pullback. Here are the opposing views and concerns:

* **The Threat of Trade Wars:** Critics worried that a tough approach to trade could lead to tariffs (taxes on imported goods). This can hurt many tech companies that rely on complex global supply chains to make their products, increasing their costs and hurting profits.

* **Inflation and Interest Rate Fears:** A pro-business push, combined with government spending, could overheat the economy and re-ignite inflation. If that happens, the Federal Reserve might be forced to raise interest rates again. Higher rates are like kryptonite for tech stocks, as they make their future profits less valuable in today's dollars.

* **Market Over-Excitement:** Some analysts argued that the week's massive rally was an overreaction. They felt that investors were getting ahead of themselves, buying stocks based on promises of future policies that might be difficult to pass or could take a long time to implement. The Friday tech slump was a classic "profit-taking" move, where investors sell to lock in gains from the week's rally, fearing the ride up was too fast.

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

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

* **The Market Hates Uncertainty, But Loves Anticipation:** The market often rallies on the *hope* of positive change, even before any concrete laws are passed. The initial surge was all about anticipation.

* **What Goes Up Must Breathe:** Even during a powerful rally, it's normal and healthy for the market to have "pullbacks" or down days. The Friday dip was a reminder that trends are not straight lines up.

* **Politics is a Short-Term Catalyst, Not a Long-Term Strategy:** While a new president can influence the market, the long-term health of stocks ultimately depends on corporate profits, the strength of the economy, and global events. Getting too caught up in daily political headlines is a risky investing strategy.

* **Diversification is Key:** The week showed that different sectors react differently to the same news. While tech stumbled at the end, other sectors held strong. This is why financial experts always recommend spreading your investments across various industries—so you're never too reliant on one area.

**In conclusion,** January 24, 2025, was a day that perfectly captured the tug-of-war in the stock market. It demonstrated how optimism over a new political era can fuel a major rally, but also how practical concerns about the future can quickly bring a dose of reality. For the average person, it was a powerful reminder that investing is a marathon, not a sprint, and that staying calm through the daily ups and downs is the surest path to long-term success.