3:22 am - March 23, 2026
The stock market during President Donald Trump’s first year back in office delivered the weakest performance of any president’s first year of a new term in two decades, according to market data. From Trump’s inauguration day to January 20, 2026, the S&P 500 rose 13.3 percent, marking the worst start to a presidency since George W. Bush began his second term in 2005, according to CFRA Research.
Despite these being healthy gains by typical standards, the stock market performance fell short of historical comparisons. In Trump’s first term, the S&P 500 gained 24.1 percent across the first year, according to CFRA Research. The benchmark index climbed higher throughout the past year, extending a bull run driven by enthusiasm about artificial intelligence.
Context Behind Stock Market Performance
The relatively modest gains came after the S&P 500 achieved its first back-to-back annual gains of more than 20 percent since the 1990s. This strong performance in preceding years set a high bar for further market appreciation. Meanwhile, international stocks outperformed the United States in 2025 for the first time in years, according to reports.
However, the past year has been marked by significant policy uncertainty from the Trump administration. Stocks slid to the brink of a bear market in April amid tariff uncertainty before sharply rebounding as Trump backed off his most severe threats. The S&P 500 clinched 39 record highs across the year, compared to 62 record highs in 2017 during Trump’s first term.
Tariff Policy and Market Volatility
Trump appears aware of the stock market performance and views the market as a barometer for his success. On Wednesday, he characterized the recent stock market dip related to uncertainty about Greenland and tariffs as insignificant, predicting the market would soon be doubled. He subsequently backed off his tariffs later that day, which sent stocks on a rebound.
Additionally, US stocks gained in 2025 amid enthusiasm about AI, optimism about Federal Reserve interest rate cuts, and corporate earnings that remained robust. Trump signed his “One Big Beautiful Bill Act” into law during the summer, and the stimulative impact of that policy could provide a further boost to markets this year, according to market analysts.
Matt Maley, chief market strategist at Miller Tabak + Co, said in an email that the front-end loading of this stimulus is a big reason why the stock market performed well in the first year of this term. Maley noted that many investors believe the president wants to let the economy run hot through the midterm elections, though this does not guarantee the second year will be as bullish for stocks as the first year.
Elevated Volatility Amid Policy Shifts
The first year of Trump’s second term yielded solid gains and notable bouts of volatility. Wall Street’s fear gauge, the VIX, surged to historically high levels in the spring amid turmoil surrounding Trump’s tariffs. Nick Colas, co-founder at DataTrek Research, said in an email that the VIX went over 50 for the first time since the pandemic during the height of trade policy uncertainty.
In contrast to short-term market fluctuations, some wealth managers are focusing on fundamental factors. Tim Thomas, chief investment officer at Badgley Phelps Wealth Management, said he has adjusted some client portfolios to be more defensive with less exposure to risky assets. Nevertheless, Thomas emphasized the importance of looking past short-term volatility and focusing on fundamentals like strong earnings growth, the AI boom, and supportive fiscal policy.
Thomas acknowledged that policy uncertainty is hard to invest around because it can change in an instant. He stressed the need for some kind of hedge while staying focused on the long term and company fundamentals, which will ultimately drive returns.
Market Outlook Amid Uncertainty
On the heels of three years of strong gains, Wall Street widely expects the S&P 500 to climb higher again this year, though uncertainty abounds. The US dollar continues to struggle this year, while safe havens like gold and silver continue to hit record highs, according to reports.
Jim Hagerty, CEO at Bartlett Wealth Management, told CNN that his key takeaway from the past year is for investors to stay disciplined. When markets have been really good or occasionally scary, it can tempt people away from their disciplines, Hagerty said. He emphasized the importance of carefully reviewing asset allocation to ensure it remains suitable and rebalancing if necessary.
Investors will continue monitoring policy developments and economic fundamentals as the administration approaches the midterm elections. Market strategists indicate that policy clarity and sustained corporate earnings growth will be critical factors determining whether stock market gains can continue at their recent pace.
