Trump's Market Legacy: Two Terms, One Unprecedented Relationship with Wall Street
1. How Trump’s Tweets and Policies Shaped the Market—And What His Return Means for Investors
The numbers tell a story that even Donald Trump's harshest critics cannot ignore. On January 20, 2017, when Trump first took the presidential oath, the S&P 500 closed at 2,271 points. Four years later, despite a global pandemic that triggered the fastest bear market in history, that same index had climbed to 3,798—a 67% gain that ranked as the fifth-best stock market performance during any four-year presidential term since 1980.
But Trump's story with Wall Street was far from over.
In November 2024, American voters delivered something unprecedented in modern politics: they returned Trump to the White House, making him only the second president in U.S. history to serve non-consecutive terms. Now, six months into his second presidency, the relationship between this singular political figure and the stock market has proven even more volatile, more dramatic, and more consequential than his first go-around.
From the euphoric post-election rally that pushed markets to new records, to the brutal April selloff that nearly triggered a bear market, to the stunning July recovery that brought the S&P 500 back to all-time highs—Trump's second term has compressed years of typical market cycles into mere months. Through July 15, 2025, the S&P 500 is up 6.2% year-to-date, though that modest figure conceals extraordinary volatility beneath the surface.
This is the definitive story of how one president's unique approach to governance, communication, and economic policy has fundamentally altered the relationship between politics and markets—not once, but twice.
2. Trump’s First Term: The “Trump Bump” and Market Turbulence (2017-2021)
The Tax Cut Revolution and Market Euphoria
The stock market initially responded to Trump's 2016 election with overnight fear—Dow futures plummeted hundreds of points during election night—but quickly reversed course the next morning. What followed was something Wall Street had rarely seen: policy announcements that moved markets in real-time, with Trump's social media posts capable of adding or subtracting billions in market capitalization within minutes.
The foundation of Trump's first-term market rally rested on one landmark piece of legislation: the Tax Cuts and Jobs Act of 2017. Signed in December 2017, the law slashed the corporate tax rate from 35% to 21% and provided substantial individual tax relief. Corporate earnings surged as a result, with S&P 500 companies reporting double-digit profit growth in 2018, while share buybacks hit record levels as companies used tax windfalls to repurchase stock.
By early 2018, the Dow Jones Industrial Average crossed 25,000 for the first time, marking a 30% gain from Election Day. The S&P 500 and NASDAQ also hit all-time highs, boosted by corporate tax cuts and deregulation efforts that increased investor confidence.
The numbers speak to the effectiveness of this approach: during Trump's first term, the tech-heavy NASDAQ posted a stellar gain of 137.6%, marking the top NASDAQ return under any president since 1981.
Trade Wars and Tweet-Driven Volatility
But Trump's first presidency also introduced something entirely new to modern markets: governance by social media. Each presidential tweet about trade negotiations, Federal Reserve policy, or individual companies could trigger massive market swings. In 2018 and 2019, Trump's trade war with China dominated headlines and trading desks, with each presidential tweet capable of moving the Dow 400 points in either direction.
The trade conflict with China revealed both Trump's market influence and its limits. Semiconductors and industrials, exposed to Chinese supply chains, suffered dramatic drawdowns during trade war escalations, while safe havens like gold and Treasury bonds saw inflows on every tariff announcement.
The volatility was unprecedented. 2018 ended with a brutal correction as the S&P 500 dropped nearly 20% from its September high, entering near bear-market territory by Christmas Eve. The sell-off was fueled by rising interest rates from the Federal Reserve, lingering trade war fears, and confusion over Trump's Fed criticisms and cabinet turnover.
The COVID Crash and Recovery
Trump's first term concluded with perhaps the most dramatic market event of his presidency: the COVID-19 pandemic. In February 2020, the S&P 500 reached a record high above 3,380. Just weeks later, it entered the fastest-ever bear market, plunging 34% in just over a month as the pandemic spread globally.
The response was equally dramatic. The CARES Act, signed by Trump in March 2020, provided $2 trillion in fiscal stimulus, while the Federal Reserve slashed rates to zero and launched unprecedented quantitative easing. What followed was the fastest bear-market recovery in history, with tech stocks leading the charge as work-from-home themes dominated investor psychology.
When Trump left office on January 20, 2021, the S&P 500 had gained approximately 67% during his four-year term, a performance that ranked as the fifth-best for any four-year presidential term since 1980.
3. Trump’s Second Term: Volatility and Legislative Change (2025-Present)
The Election Rally and Initial Optimism
Trump's 2024 electoral victory set off an immediate market celebration. Between the end of trading on election day, November 5, 2024, through July 15, 2025, the S&P 500 gained nearly 8%, though this period was marked by significant volatility. The S&P 500 rallied to a record high the day after the presidential vote as uncertainty about the outcome faded.
Investor optimism centered on expectations of business-friendly policies, deregulation, and tax cuts. The removal of election uncertainty, coupled with hopes for a pro-business environment under the new administration, boosted investor sentiment and contributed to initial market gains.
The "Liberation Day" Crash
But Trump's second term would prove far more volatile than his first. The defining moment came in April 2025 with what Trump called "Liberation Day"—an aggressive announcement of comprehensive tariffs that shocked financial markets. The current market wipeout hit a crescendo after Trump's "Liberation Day" event, where he shocked and alarmed the business world by promising to increase tariffs at an unprecedented pace. Two-thirds of the 15% fall in the S&P 500 occurred since Liberation Day.
The market decline was so severe that it represented the worst start to a presidential term in modern history. If the stock market had closed in bear territory—a drop of 20% from a recent peak—it would have been the earliest in a new administration that a bull market turned into a bear in the history of the S&P 500, which dates back to 1957.
The human impact was immediate and devastating. The hole blown in Americans' 401(k) plans and investment portfolios was so massive that it became hard to ignore. Financial advisors across the country fielded panicked calls from clients watching decades of retirement savings evaporate in a matter of weeks.
The One Big Beautiful Bill Act
Trump's second-term legislative centerpiece came in the form of the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025. The bill passed the Senate 51-50 on July 1, 2025, with Vice President JD Vance casting a tiebreaking vote, and passed the House 218-214 on July 3, over universal Democratic opposition in both houses.
The One Big Beautiful Bill Act is estimated to increase long-run GDP by 1.2 percent and reduce federal tax revenue by $5 trillion over the next decade on a conventional basis. The legislation's core provisions permanently extended the individual tax rates from Trump's 2017 tax cuts, which were set to expire at the end of 2025.
Tariffs dominated headlines again just days after the President signed the comprehensive tax and spending package, with one notable feature being the permanent extension of tax rates set in the Tax Cuts and Jobs Act of 2017.
The Stunning Recovery
Perhaps the most remarkable aspect of Trump's second term has been the market's resilience. The S&P 500 closed Friday at a new record high on June 27, 2025—rebounding to just a few points above its level around the start of President Donald Trump's second term. The broad-based stock index added about 0.5% Friday to trade at roughly 6,173 points.
Six months into President Donald Trump's second term, the S&P 500 closed above 6,300 for the first time, with stocks notching eight record highs in the past month. This recovery occurred despite—or perhaps because of—the extraordinary uncertainties surrounding trade policy, Federal Reserve independence, and geopolitical tensions.
4. Comparing Trump’s Two Presidential Market Records
The data reveals fascinating contrasts between Trump's two presidential terms. Through July 15, 2025, the S&P 500 year-to-date is up 6.2%. In Trump's first term, the S&P 500 gained nearly 68%, ranking as the fifth-best performance for investors during a four-year presidential term since 1980.
For context, through former President Joe Biden's four-year term, which ended January 20, 2025, the S&P 500 gained 57.85%. This means Trump's first term outperformed Biden's full presidency, while his second term began with significantly more volatility.
The difference in market character between the two Trump terms is striking. The S&P 500 dropped 2% or more on six days between January 20 and June 6, 2025, according to data provided to CNBC by Morningstar Direct. During that period, there were 18 days where the index shed 1% or more.
Yet despite this volatility, the S&P 500's annualized return for Trump's second presidency remains positive, at 1.58%.
5. The Fed’s Role: Trump, Powell, and Monetary Policy
One of the most significant aspects of Trump's second presidency has been his relationship with Federal Reserve Chair Jerome Powell. While President Trump has urged the Fed to cut rates, Fed Chair Jerome Powell has been firm that the Fed remains cautious and worried about potential inflation threats from the administration's possible tariff increases.
Some administration sources raised prospects that the President may remove Powell from his position prior to the May 2026 end to his term as Fed chair. However, President Trump noted on July 16 that it is "highly unlikely" he will remove Powell.
The Federal Reserve has kept the short-term federal funds target rate at 4.25% to 4.50% throughout 2025, though the Fed still projects two rate cuts in the year's closing months.
6. Market Winners and Losers under Trump
Trump's policies have created distinct winners and losers across market sectors. Among 2025's biggest stock gainers are data firm Palantir, NRG Energy, data center supplier Super Micro Computer, gold miner Newmont and Uber. Meanwhile, food and apparel companies—such as Deckers Outdoor, Lululemon, Brown-Forman, Constellation and Campbell's—have been weighed down by tariff fears and rank among the S&P's worst performers this year.
Another large-cap tech stock, Palantir Technologies (PLTR), became the top-performing stock in the S&P 500 since January 17, though following a run of 113.9%, it earned a place on the list of the riskiest S&P 500 stocks.
The defense sector has particularly benefited from Trump's policies, with defense stock Howmet Aerospace (HWM) gaining 52.2% during Trump's second term.
7. The Future: What History Reveals About Trump-Era Markets
Wall Street's relationship with Trump has been defined by one constant: unpredictability. Trump's "unpredictable approach" to trade and attacks on the Fed's independence could "trigger" a downturn in stocks, according to economists at Capital Economics.
Yet the market's resilience has surprised many observers. The "softening" of initial tariff announcements has "removed the worst-case scenarios" for outlooks for economic growth and inflation, according to investors at BlackRock, which has supported the market's rally.
Goldman Sachs Research forecasts the S&P 500 to rise 6% to 6,600 in the next six months and 11% to 6,900 in the next 12 months, citing improved outlook for interest rates and continued strength in the largest stocks.
8. Trump’s Enduring Impact on Wall Street
Donald Trump's impact on financial markets represents something unprecedented in American political history. No president has wielded such direct, immediate influence over market sentiment, nor has any commander-in-chief's communication style been so perfectly suited to the instant-reaction nature of modern financial markets.
During his first term, the DOW closed above 20,000 for the first time in 2017 and topped 30,000 in 2020, while the S&P 500 and NASDAQ repeatedly notched record highs. His second term has proven even more dramatic, with the fastest presidential-term market decline in modern history followed by an equally stunning recovery.
What emerges from examining both Trump presidencies is a portrait of markets adapting to a new kind of political leadership—one where policy announcements arrive via social media, where trade negotiations play out in real-time on cable news, and where the traditional boundaries between politics and markets have been permanently altered.
For investors, the lesson is clear: in the Trump era, volatility isn't a bug—it's a feature. The president who once declared himself "a very stable genius" has presided over some of the most unstable markets in modern history. Yet through two terms and eight years of governance, those same markets have ultimately rewarded patient investors who could stomach the turbulence.
Whether that pattern continues will depend on factors no forecasting model can predict: the next tweet, the next tariff announcement, the next unprecedented moment in an unprecedented presidency. In the Trump market, the only certainty is uncertainty—and for those brave enough to navigate it, the potential for both extraordinary gains and devastating losses.
The relationship between this president and Wall Street has rewritten the rules of political-market interaction. As Trump's second term continues, one thing remains clear: when it comes to moving markets, Donald Trump has no equal in the modern presidency.
