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

# The Stock Market on January 24, 2025: A Day of Mixed Signals

**January 24, 2025**, was a day that captured the complex mood of the financial world. Major U.S. stock indexes like the **S&P 500** and **Nasdaq** closed lower for the day, pulled down by a slump in big technology companies. However, the story of the *week* was very different—all the major indexes posted significant gains.

This seemingly contradictory performance—a down day but a strong week—was closely tied to one major event: the **return of Donald Trump to the White House** for a second term, which began on January 20, 2025.

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### 1. Historical Background: From Bull Markets to Political Shocks

To understand this day, we need a bit of recent history.

* **The Long Boom (2010s-2020s):** For over a decade, the U.S. stock market experienced a historic rise, driven largely by giant technology companies like Apple, Microsoft, and Google. These "Big Tech" stocks became so influential that their performance could swing the entire market.

* **The Role of Politics:** Markets have always reacted to presidential elections. Trump's first term (2017-2021) was marked by major corporate tax cuts and deregulation, which many investors liked, leading to strong market gains. His style of governing was seen as unpredictable, which could cause short-term market swings.

* **The Setup for Jan. 24, 2025:** Entering 2025, the market was near record highs. Trump's re-election victory in November 2024 created immediate speculation. Investors began guessing which of his first-term policies (like tax cuts and lighter regulation) would return, and what new policies he might introduce.

The week of January 20 was the first full trading week of the new administration. Investors were digesting his initial actions and statements, leading to a volatile but ultimately positive week for stocks.

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### 2. General Public Opinion: Why the Market Reacted Positively

For many investors and analysts, the week's gains made sense. The common optimistic views included:

* **Expectation of Business-Friendly Policies:** There was a widespread belief that the new administration would quickly push for policies perceived as good for corporate profits, such as:

* Extending or making permanent the 2017 tax cuts.

* Reducing regulations on industries like energy and finance.

* Taking a tough stance in trade negotiations to benefit U.S. companies.

* **"Buy the Rumor":** Markets often rise in *anticipation* of good news. The entire week was seen as investors "pricing in" their expectations for stronger economic growth and higher corporate earnings.

* **Tech's Daily Slump as Normal Profit-Taking:** The dip on January 24th itself wasn't seen as alarming. After a big weekly run-up, it's common for investors to sell some shares to lock in profits, especially in high-flying tech stocks. This was viewed as a natural pause.

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### 3. Counterarguments: The Cautions and Criticisms

Not everyone was cheering the rally. Skeptics and concerned observers pointed out several risks:

* **Markets Hate Uncertainty:** While some policies are seen as business-friendly, Trump's unpredictable approach to governing and trade can create sudden uncertainty. This uncertainty can scare investors and lead to sharp downturns later.

* **Inflation Fears:** Policies that boost economic growth can also accelerate inflation. If inflation fears grow, the Federal Reserve might be forced to raise interest rates more aggressively, which is typically bad for stock prices.

* **Overdependence on Tech:** The fact that a bad day for tech could drag down the entire S&P 500 highlighted a critical weakness: the market was too reliant on just a handful of companies. This lack of diversification is risky.

* **Short-Term vs. Long-Term:** Critics argued that the week's rally was a short-term emotional reaction, not based on real, measurable economic improvements yet. They warned that the real test would come when actual policy details were released.

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### 4. Implications and Lessons Learned

January 24, 2025, offers several key takeaways for everyday observers of the market:

* **Look Beyond the Daily Headline:** A single day's drop does not define a trend. The **weekly gain** was more significant than the **daily loss**, reminding us to focus on the bigger picture.

* **Politics Moves Markets:** The direct link between the inauguration and the market's performance is a clear reminder that government policy is a powerful driver of investor confidence and fear.

* **Expect Volatility:** The mix of a strong week and a weak day underscores that markets under new political leadership will likely be bumpy. Big swings in both directions should be expected.

* **Diversification Matters:** The tech slump's impact reinforced the oldest rule in investing: don't put all your eggs in one basket. A healthy portfolio is spread across different sectors.

**In summary,** January 24, 2025, was a snapshot of a market in transition. It was digesting a major political change, balancing optimism about potential growth with the reality of risks and uncertainty. The day taught observers to weigh short-term noise against longer-term trends and to remember that in the stock market, the only constant is change.