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 notable day on Wall Street. The **S&P 500 index**—a basket of 500 of America's biggest companies—closed slightly lower, stepping back from a record high it had just reached. This dip was largely because **technology stocks**, which had been soaring, took a breather and slumped.

However, the bigger story was the weekly performance. Despite the daily drop, the **S&P 500, the Nasdaq (heavy with tech stocks), and the Dow Jones Industrial Average** all posted significant gains for the entire week. This surge was widely linked by analysts and media, like *MarketWatch*, to the political event of **Donald Trump's return to the White House** after winning the 2024 election.

Let's break down what happened and why it matters.

---

### 1. Historical Background: From Booms to Busts and Political Swings

The stock market doesn't exist in a vacuum. Its daily moves are part of a long story.

* **The Market's Long Climb:** For decades, the U.S. stock market has generally trended upward, despite regular dips and crashes (like the 2008 financial crisis or the 2020 COVID-19 crash). The S&P 500 hitting record highs had become a familiar story through the 2020s, driven heavily by giant technology companies.

* **Tech's Dominance:** Companies like Apple, Microsoft, and Nvidia became so massive that their performance could swing the entire market. A "tech slump" could easily pull the S&P 500 down, even if other sectors were doing fine.

* **Politics and Markets:** Historically, markets react to presidential elections and new policies. The Trump presidency (2017-2021) was associated with **corporate tax cuts and deregulation**, which many investors liked, leading to strong market rallies. His return in 2025 sparked memories of those policies.

**How We Got Here:** The week of January 20, 2025, was dominated by the presidential inauguration. Investors, anticipating a return of business-friendly policies, began buying stocks enthusiastically, pushing markets to records. January 24th's dip was simply a pause after that big run-up—a common occurrence as some investors cash in their profits.

---

### 2. General Public Opinion: Why Many Were Optimistic

For many everyday investors and financial experts, the market's strong weekly gain made sense.

* **Expectation of Business-Friendly Policies:** The common view was that a Trump administration would likely focus on:

* **Lower taxes** for corporations and individuals.

* **Reduced regulation** on industries like energy and finance.

* **Trade policies** aimed at protecting U.S. companies.

* **The "Animal Spirits" Theory:** This is a simple term for market confidence. Many believed that the mere return of a president perceived as pro-business would boost confidence, encouraging companies to invest and hire more, which is good for stocks.

* **Short-Term Rally Reaction:** It's standard for markets to move sharply right after a major, expected political event. The general opinion was that the week's rally was a direct, logical response to the inauguration.

---

### 3. Counterarguments: Reasons for Caution and Criticism

Not everyone agreed that the rally was wise or sustainable. Several counterarguments and criticisms emerged.

* **"Buy the Rumor, Sell the News":** This old market saying suggests that investors buy stocks on the *expectation* of an event (the rumor of Trump's policies) and then sell when it actually happens (the news of the inauguration). The January 24th slump was seen by some as exactly this—profit-taking after the hype.

* **Ignoring Long-Term Risks:** Critics argued that investors were overlooking potential downsides:

* Increased government **debt** from tax cuts.

* **Trade tensions** with other countries that could hurt large U.S. companies.

* **Market volatility** driven by unpredictable political rhetoric.

* **The Tech Warning Sign:** The slump in tech stocks on the 24th was a red flag for some. It showed that even during a political rally, the market's most expensive and influential sector was vulnerable. This hinted that company-specific problems (like high prices) still mattered more than politics.

* **Overestimating Political Impact:** Some analysts cautioned that a president's direct power over the economy is limited. Factors like **Federal Reserve interest rate decisions** and **global economic health** often have a much bigger long-term impact on stocks.

---

### 4. Implications: Lessons from January 24, 2025

This single day of trading offers several important lessons for investors and observers.

* **Daily Headlines vs. Long-Term Trends:** The key takeaway is to **focus on the weekly trend, not just the daily move**. A small down day in a big up week is normal. It teaches us not to overreact to a single day's news.

* **Politics is a Short-Term Catalyst:** The event confirmed that political changes can cause immediate market swings. However, it also highlighted that these swings can be fleeting. Sustainable growth comes from corporate profits and economic health, not just presidential agendas.

* **Diversification is Key:** The tech slump on a day when the political news was "positive" is a perfect reminder: **don't put all your eggs in one basket**. A healthy portfolio includes different sectors so it isn't wrecked by one bad day for tech.

* **The Market is a Voting Machine:** In the short term, the market acts like a voting machine, reacting emotionally to news (like an inauguration). In the long term, it acts like a weighing machine, carefully judging the actual value of companies. January 24, 2025, showed both forces at work simultaneously.

**Final Thought:** The market's mixed message on January 24th—a down day but a huge up week—was a classic example of Wall Street digesting big news. It reminded everyone that while politics can fuel short-term rallies, the enduring health of the market depends on the everyday performance of the companies we invest in. For the average person, the lesson was clear: build a solid, diversified plan and don't let the whirlwind of daily headlines knock you off course.