New York
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The stock market in President Donald Trump’s first year back in the White House was the weakest of any president’s first year of a new term since 2005, when George W. Bush started his second term.
From Trump’s inauguration day to January 20, 2026, the S&P 500 rose 13.3% — healthy gains by any standard. But it was the worst start to a presidency in 20 years. In comparison, the S&P 500 gained 24.1% across the first year of Trump’s first term, according to CFRA Research.
Stocks climbed higher across the past year, extending a bull run driven by enthusiasm about artificial intelligence. Meanwhile, international stocks outperformed the United States in 2025 for the first time in years.
The stock market, of course, doesn’t operate in a vacuum. Trump’s second term came on the heels of the S&P 500’s first back-to-back annual gains of more than 20% since the 1990s. The bar for further gains was already set pretty high.
Still, this past year has been marked by policy whiplash 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 clinched 39 record highs across the year. In comparison, the index clinched 62 record highs in 2017, the first year of Trump’s first term.
Trump appears to be aware of the stock market’s performance and views the market as a barometer for his success. On Wednesday, he said the recent stock market dip because of uncertainty about Greenland and tariffs was “peanuts” and the market would soon be “doubled.” He backed off his tariffs later in the day, which sent stocks on a rebound.
US stocks gained in 2025 amid enthusiasm about AI, optimism about Federal Reserve interest rate cuts, corporate earnings that remain robust and an economy that proved resilient. Trump in the summer also signed his “One Big Beautiful Bill Act” into law. The stimulative impact of that policy could provide a further boost to markets this year.
“The front-end loading of this stimulus is a big reason why the stock market did well the first year of this term,” Matt Maley, chief market strategist at Miller Tabak + Co, said in an email.
“This is also why many investors are thinking that the president wants to ‘let the economy run hot’ through the midterm elections,” Maley said. “This does not mean that the second year will be as bullish for stocks as the first year, but there is little question that the administration wants to see a very strong stock market this year, especially in the 5-6 months leading into those midterm elections.”
The first year of Trump’s second term yielded solid gains and bouts of volatility. Wall Street’s fear gauge, the VIX, surged to historically high levels in the spring amid the turmoil surrounding Trump’s tariffs.
“The only truly exceptional thing was that the VIX went over 50 for the first time since the pandemic during the height of trade policy uncertainty,” Nick Colas, co-founder at DataTrek Research, said in an email.
Tim Thomas, chief investment officer at Badgley Phelps Wealth Management, said he’s adjusted some client portfolios to be more “defensive,” or have less exposure to risky assets, but ultimately is looking past short-term volatility and focusing on fundamentals like strong earnings growth, the AI boom and supportive fiscal policy.
“The market performance last year was pretty good,” Thomas said. “There is a lot of policy uncertainty out there. Policy uncertainty is hard to invest around, because, by its very nature, it can change in an instant.”
“You need to have some kind of hedge in place,” Thomas said. “But the other key is just really staying focused on the long term and staying focused on the companies and their fundamentals. In the end, those are going to be the drivers of the returns.”
On the heels of three years of strong gains, Wall Street widely expects the S&P 500 to climb higher again this year. But uncertainty abounds. The US dollar continues to struggle this year, while safe havens like gold and silver continue to hit record highs.
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 when they’re scary, it can tempt people away from their disciplines,” Hagerty said. “I would just emphasize: stay disciplined. And given how strong things have been, take a careful look at your asset allocation, make sure it’s suitable and rebalance if necessary.”
