Market Update | January 21st - January 24th

The What

If you remember from last week's market update, the inauguration of President Donald Trump was a highly anticipated event for investors. It’s safe to say Trump did not let investors down. With his pro-business and AI policy, the market was propped up for yet another successful week.

First, let's look at the S&P 500, one of the most trusted economic indicators in the world. Climbing about 1.74%, the S&P 500 has now marked its second consecutive week of positive return. The Dow Jones Industrial Average, made up of 30 very largely traded companies, rose even more, climbing 2.2%, signaling even stronger market optimism. Finally, the Nasdaq 100, known for its tech-heavy characteristics, grew 1.65%.

Next, let's look at some commodity performance this week. Gold prices rose even more this week compared to last week, jumping 2.35%. With this consistent performance, we could see the price of gold hitting all-time highs in the near future. Additionally, oil prices fell again, with the price of crude oil per barrel falling 2.84%.

The Why

Investors can thank President Trump for this week's market optimism. Why? Well, on his first day in office, Trump signed a whopping 26 executive orders. These orders chiseled down to focus on 3 key areas: energy, technology, and tariffs—all of which have significant implications for the economy.

Let's start with energy. Trump’s idea towards energy is to maximize fossil fuel production in the US to achieve energy independence. This, in theory, would lead to lower energy costs and bolster the US’s presence as a leader of energy production. As a result, since his re-election, we’ve seen the energy sector of the market climb, with companies such as Exxon Mobil growing significantly since November.

Now, let’s move onto technology. AI is arguably the fastest-growing technology in the entire world. The market can even thank AI for saving it the last two years and being part of the reason the S&P 500 has gone up over 50%. On Tuesday, Trump announced a $500 billion investment into the AI private sector towards a project called StarGate. Created by OpenAI, StarGate is a new company aiming to invest $500 billion in AI infrastructure by 2029. If anything, the president of the United States approving and signing off on this project pushes the industry up even further.

Next, on tariffs. A main economic concern during his campaign were Trump's promises for tariffs. Ultimately, tariffs are bad for the economy in the short term. Trump had been promising tariffs up to 20% on all imports, which scared investors of a second Trump presidency. But, the reason the market hasn't slipped too much is because investors are now showing more interest in US-centric companies and are shifting their capital, not necessarily pulling it out.

What’s Next

Next week is a huge one, with lots of economic data coming out, including the consumer confidence report. But the most important thing about next week is company earnings. Meta, Microsoft, Apple, and Tesla—four of the biggest and most important companies in the world—will release their earnings later in the week.

This has HUGE implications for the market for a couple of reasons. First, if each company reports well and exceeds expectations for said quarter, the market will likely continue to grow and grow, with AI and tech companies leading the way. On the other hand, if the companies miss their earnings, it could mean a significant drop in their stocks for the next couple of months.

Overall, an exciting week is ahead of us. Investors are still settling into the Trump presidency, more economic data is being released, and four of the biggest companies in the world will either help or hurt the economy.