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 and often contradictory nature of the stock market. Major indexes like the **S&P 500** closed slightly lower, stepping back from a record high, largely because big technology companies saw their stock prices fall. However, the bigger story was the **strong weekly gain** across the board—the S&P 500, the tech-heavy **Nasdaq**, and the **Dow Jones Industrial Average** all finished the week significantly higher.

This surge was widely linked to a major political event: the **return of Donald Trump to the White House** for a second term. The market’s reaction provides a fascinating snapshot of how politics, economics, and investor psychology collide.

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### 1. Historical Background: Markets and Political Change

To understand this day, we need to look at the recent past.

* **The 2020s Rollercoaster:** The first half of the decade was turbulent. It began with the recovery from the COVID-19 pandemic, followed by a period of high inflation and rapid interest rate hikes by the Federal Reserve. This caused volatility, especially in 2022 and 2023, when technology and growth stocks, which had led the market for years, stumbled.

* **The "Trump Trade" Memory:** During Donald Trump's first term (2017-2020), the stock market experienced a strong bull run. This was fueled by policies investors liked, such as corporate tax cuts and promises of deregulation. The term "Trump Trade" came to mean betting on sectors like banking, energy, and industrials that were expected to benefit from his policies.

* **Election Anticipation:** As the 2024 election approached, markets began pricing in the potential outcomes. Trump's victory in November 2024 set off an immediate rally in certain sectors. By January 2025, investors were actively repositioning their portfolios based on expectations of his policy agenda.

**In short, January 24 wasn't an isolated event. It was the latest chapter in a long story of markets reacting to political shifts, with investors looking to the past to predict the future.**

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### 2. General Public Opinion: Why the Market Rallied

The dominant view among many investors and analysts was optimistic. The weekly gains were seen as a direct vote of confidence in the new administration.

* **Expectation of Business-Friendly Policies:** The common belief was that a second Trump term would bring:

* **Lower Taxes:** Potential extensions or new cuts for corporations and individuals.

* **Less Regulation:** Easier rules for industries like energy, finance, and healthcare.

* **Pro-Growth Stance:** Policies aimed squarely at boosting economic growth, even if it risked higher inflation.

* **Sector Rotation:** Money flowed out of the previously dominant "Big Tech" stocks (which had a bad day on the 24th) and into so-called "old economy" stocks—companies in banking, defense, infrastructure, and fossil fuels. This is called "sector rotation."

* **Simplified Narrative:** For many, the story was easy to grasp: **A president perceived as good for business is back, so stocks go up.** The daily dip in tech was seen as a minor, healthy adjustment in a larger upward trend.

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### 3. Counterarguments: The Skeptical View

Not everyone was cheering. Several voices urged caution, explaining why the tech slump and the rally might be more complicated.

* **Markets Hate Uncertainty:** Some analysts argued that the new administration's approach to trade (tariffs), immigration (labor market impacts), and the large national debt could create new uncertainties that hurt the market in the long run.

* **Interest Rates are Key:** Skeptics pointed out that the Federal Reserve's decisions on interest rates are far more powerful for the market than any single president. If inflation remained stubborn, high rates could continue to pressure the economy and stock valuations.

* **Tech Slump Isn't Just Politics:** The bad day for tech giants might not have been about Trump at all. These companies had become very expensive, and any bad news (like a weak earnings report) could trigger a sell-off. Their decline could simply be a natural market correction.

* **Short-Term vs. Long-Term:** The critic's view was: **"This is a short-term sentiment rally based on hopes, not long-term fundamentals based on proven results."** They warned against getting swept up in the excitement.

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### 4. Implications and Lessons Learned

The events of January 24, 2025, offer clear takeaways for anyone watching the market.

* **Politics Moves Markets (In the Short Term).** Elections and policy announcements create immediate waves of optimism or fear that can override other economic data.

* **Don't Confuse a Daily Move with a Trend.** The key lesson was in the headlines: the **daily loss** was overshadowed by the **weekly gain**. Smart investors look at the bigger picture and don't panic over one day's movement.

* **Diversification is Crucial.** The day perfectly showed why you shouldn't put all your money in one sector. While tech fell, other sectors rose. A diversified portfolio helps weather these shifts.

* **Narratives Can Be Overly Simple.** The easy story was "Trump wins, market wins." The reality is always more nuanced, involving global events, company earnings, and central bank policy. It's dangerous to invest based on a single headline.

**Final Thought:** January 24, 2025, reminded us that the stock market is a discounting machine—it prices in what it *expects* to happen in the future. The weekly rally showed investors *expected* pro-growth policies. The daily tech slump showed that even in a rising market, risks and rotations persist. The true test would be whether the expectations fueling the rally would turn into economic reality in the months and years to come.