Market Recap: Stocks Edge Higher as Trump’s Second Term Begins
Major Indices Close in Positive Territory
On Monday, January 20, 2025, U.S. stock markets closed higher as investors welcomed Donald Trump’s second inauguration as President of the United States. Despite it being a federal holiday for Martin Luther King Jr. Day, financial markets remained active globally, reflecting cautious optimism about the incoming administration’s economic policies.
The S&P 500 (SPX) gained 0.999%, adding 59.32 points to close at 5,996.66. This positive movement pushed the index closer to the psychologically important 6,000-point mark. The Dow Jones Industrial Average (DJI) rose by 0.8% or 334.70 points, ending the day at 43,487.83. Meanwhile, the tech-heavy Nasdaq Composite showed the strongest performance, advancing 1.5% or 291.91 points to finish at 19,630.20.
Sector Performance and Key Movers
The day’s gains were broad-based, with nine out of eleven sectors in the S&P 500 closing in positive territory. Technology, Consumer Discretionary, and Financials led the rally, with the Technology Services Select Sector SPDR (XLK) up 1.6%, the Consumer Discretionary Select Sector SPDR (XLY) gaining 1.4%, and the Financials Sector SPDR (XLF) rising 0.8%.
Notable stock movements included:
1. Independent Bank Corp. (INDB): Shares surged 4.9% after reporting better-than-expected Q4 2024 earnings.
2. Schlumberger Limited (SLB): The stock climbed 6.1% following strong Q4 2024 results that beat analyst estimates.
3. Ashapura Minechem, Ganesh Housing Finance Corporation, Brookfield India Real Estate Trust REIT, BGR Energy Systems, and BSE: These stocks hit their 52-week highs during the trading session.
Market Sentiment and Economic Indicators
Investor sentiment remained cautiously optimistic as markets digested Trump’s inauguration speech and anticipated potential policy shifts. The CBOE Volatility Index (VIX), often referred to as the “fear gauge,” decreased by 3.8% to 15.97, indicating reduced market anxiety.
Recent economic data also contributed to the positive mood:
1. Housing Starts for December 2024 came in at 1,499,000, showing growth from the revised November figure of 1,294,000.
2. Industrial Production for December increased by 0.9%, a significant improvement from November’s revised 0.2% increase.
3. Capacity Utilization for December rose to 77.6%, up from November’s revised 77%.
Upcoming Market Events
Investors are closely watching several key events that could impact market direction in the coming days:
1. Bank of Japan (BOJ) Policy Decision: Markets are pricing in an 80% chance of a rate hike later this week, which could have significant implications for global currency markets.
2. Trump Administration’s First Policy Moves: Analysts expect a flurry of executive orders and policy announcements in the early days of Trump’s second term, particularly regarding trade and economic policies.
3. Q4 2024 Earnings Season: With several major companies reporting this week, earnings results will continue to be a key driver of market sentiment.
Global Market Impact
The inauguration and U.S. market performance had ripple effects across global markets:
1. European stocks edged higher, with the pan-European STOXX 600 up 0.1%, supported by gains in bank and technology stocks.
2. Asian markets showed strength, with Hong Kong’s Hang Seng index closing up 1.8%.
3. The U.S. dollar dipped slightly against a basket of major currencies as traders awaited clarity on the new administration’s policies.
Cryptocurrency and Commodities
In the alternative asset space:
1. Bitcoin reached a new all-time high of $108,943, reflecting continued enthusiasm in the cryptocurrency market.
2. Gold hovered around $2,706 an ounce, maintaining its appeal as a safe-haven asset.
3. Brent crude futures dipped slightly on expectations that Trump may ease curbs on Russia’s energy sector.
As markets digest the implications of Trump’s second term and await further policy details, investors remain focused on economic data, corporate earnings, and geopolitical developments. The coming weeks are likely to be crucial in setting the tone for market performance in 2025.
