Is Stock Market Open On MLK Day? Navigating Trump's Inauguration and Market Volatility

As Martin Luther King Jr. Day approaches on January 20, 2025, investors are wondering whether the U.S. stock market will be open for trading. The answer is no, as the NYSE and Nasdaq will both be closed in observance of the federal holiday. However, with Donald Trump's inauguration set to take place on the same day, market participants are bracing for potential volatility and shifts in sentiment.

Trump's inauguration could herald a more volatile period for markets, with the Republican seen moving quickly on a wide swath of issues including trade and immigration that are expected to swing asset prices. Trump's tariff plans could further fan inflation fears that pressures bond and stock prices, while efforts to tighten immigration controls could also reverberate through those markets. Moves to ease regulation are poised to lift assets, including crypto and bank stocks.

"The markets will be very sensitive to this speech," said Jeff Muhlenkamp, a portfolio manager at investment management firm Muhlenkamp & Co. "Everyone right now is trying to parse every word and nuance that comes from Trump or his biggest allies."

Some prices already incorporate Trump's expected policy aims, among them tax cuts, reduced regulations and tariffs on foreign imports. The address could also lay the groundwork for White House actions in the coming days and weeks.

In general, stocks have had a tepid reaction to presidential inauguration, although this time could be different given Trump's potential to be unpredictable and ability to shake markets with his commentary, investors said. With inaugurations since World War II, the S&P 500 has posted an average decline of 0.27%, with the index rising or falling on about half the occasions on the day of the speeches themselves or on the first day of trading following instances markets were closed, according to LSEG data.

Following Trump's last inaugural address, in January 2017, the S&P 500 ended up 0.3% on the day. The U.S. stock and bond markets are closed on Monday, which is also the Martin Luther King holiday, so much of the trading reaction may not be evident until Tuesday.

During the entirety of Trump's first term, the S&P 500 rose nearly 68%, but markets saw bouts of volatility, stemming in part from a trade war Trump fought with China. As investors look ahead to Trump's second term, they should be prepared for potential market swings and adjust their portfolios accordingly.

Investors should consider the following strategies to navigate potential market volatility during Trump's inauguration:

1. Diversify Your Portfolio: Ensure your portfolio is diversified across various sectors and asset classes to minimize the impact of any single event or policy change.
2. Stay Informed: Keep up-to-date with the latest news and analysis on Trump's policy agenda and its potential impact on markets.
3. Consider Hedging Strategies: Use options, futures, or other derivatives to protect your portfolio against potential market downturns.
4. Maintain a Long-Term Perspective: Remember that market volatility is a normal part of investing, and that short-term fluctuations may not necessarily reflect long-term trends.
5. Review Your Portfolio Regularly: Regularly assess your portfolio's performance and adjust your holdings as needed to align with your investment goals and risk tolerance.

By following these strategies, investors can better navigate the potential market volatility that may arise during Trump's inauguration and Martin Luther King Jr. Day.