Dow Leads Weekly Stock Market Rally Ahead of Trump Inauguration

The Dow Jones Industrial Average (DJIA) has led a weekly stock market rally, with investors bidding up equities in anticipation of Donald Trump's inauguration on Monday. The S&P 500 and Nasdaq have also shown strong performance, with the DJIA on track for its best week since early November. This rally can be attributed to reassuring inflation data and optimism about Trump's business-friendly policies.



Cryptocurrencies, such as Bitcoin, have also charged higher, with the price of Bitcoin (BTCUSD) surging above $105,000 on Friday. This rally is likely driven by expectations that Trump will support blockchain technology and potentially make crypto a national priority. Shares of Trump Media & Technology Group (DJT) have also gained, up about 2% on Friday, having risen more than 20% since the start of the year.



However, some investors have shown caution heading into Trump's second term. Individual investors have been less active in buying stocks like DJT and crypto stocks in recent weeks, possibly due to uncertainty about the future of inflation and interest rates. The Cboe Volatility Index (VIX), a measure of expected volatility in the S&P 500 index, was around 16 on Friday, January 18, 2025, after falling steadily earlier in the week. However, options volume was above average on Thursday, and the most traded contract was the VIX at 18, expiring on January 22, suggesting that traders expect volatility to rebound in the coming week.



Despite the uncertainty and volatility, the stock market has shown resilience. The S&P 500 and DJIA were on track to have their best week since early November, while the Nasdaq was set to log its best week since December. This resilience can be attributed to reassuring inflation data and anticipation of business-friendly policies under Trump's second term.



In conclusion, the stock market has rallied ahead of Trump's inauguration, driven by optimism about his policies and reassuring inflation data. However, investors have also shown caution, with some signs of jitters on Wall Street. The market's performance in the coming weeks will depend on how Trump's policies unfold and how investors react to any potential volatility. As always, it's essential for investors to stay informed and adapt their strategies accordingly.