The stock market under President Trump remains resilient because earnings growth, consumer spending, and lower interest rates continue to support stock prices.
Tariffs still matter, but oil prices, inflation, and geopolitical conflict now drive more of the market’s short-term moves.
Investors may benefit more from rebalancing, diversification, and phased investing than from reacting to every headline.
President Trump’s policy changes have moved markets quickly, especially on trade. In 2025, tariff announcements and shifting trade rules triggered a sharp selloff, with the S&P 500 falling nearly 20% in seven weeks around the April 2 “Liberation Day” briefing. The market then rebounded 32% from its April 8 low and remains near all-time highs despite a recent pullback as of March 25, 2026.1
Investors did not need every risk to disappear before buying stocks again. Instead, they regained confidence that businesses could adjust and grow profits, and the consumer and economy could absorb policy changes better than many expected. “Since April 2025, investors have overcome concerns that tariffs would negatively impact economic growth, earnings, and inflation,” says Bill Merz, head of capital markets research for U.S. Bank Asset Management Group.
More parts of the market joined that rebound as 2026 began. Smaller-company stocks also rose nearly 45% from last April’s lows, showing that gains spread beyond a narrow group of large companies.1 When more parts of the market participate, investors usually gain confidence that the rally rests on broader support.
Markets now focus on more than tariff policy alone. U.S. and Israel strikes against Iran and its military and nuclear installations have become the most immediate source of volatility, while the Russia-Ukraine war continues to shape the broader global backdrop. U.S. oil prices rose more than 40% since the Iran conflict’s outbreak, the S&P 500 fell roughly 7% below its prior peak before stabilizing, and developed and emerging international stock indexes declined about 10% to 12%.1
International markets have reacted more sharply because most economies in Europe and Asia depend on imported energy. When oil and natural gas prices rise, households lose spending power and businesses face higher operating costs. The U.S. consumer faces a similar shock, though the U.S. energy industry benefits from those higher prices and its position as the largest global energy producer, helping mitigate some of consumers’ pain. Those pressures in import heavy economies can slow growth and lift inflation at the same time, which is why investors are attentive to energy shocks.
“The key market question is not whether conflict creates headlines. It is whether higher energy prices last long enough to slow growth, lift inflation, and change the path for interest rates.”
Tom Hainlin, senior national investment strategist for U.S. Bank Asset Management Group.
The Strait of Hormuz remains central to that oil price risk. About 20% of global oil supplies and liquefied natural gas trade moved through the Strait in 2024,2 and fertilizer shipments through the same route can also increase food-price pressure if disruption lasts.3 “The key market question is not whether conflict creates headlines. It is whether higher energy prices last long enough to slow growth, lift inflation, and change the path for interest rates,” says Tom Hainlin, senior national investment strategist for U.S. Bank Asset Management Group.
Trade and tariff policies still matter, but investors no longer respond to every tariff headline in the same way. A Supreme Court ruling canceled most 2025 tariffs imposed under one legal authority, and the Trump administration later announced a temporary 10% global tariff under Section 122 while it explored other options. Even if the effective tariff rate eases from its earlier peak, it remains well above 2024 levels.
Investors have shifted their focus from volatility alone to economic impact. They now ask whether tariffs will materially change growth, inflation, and earnings rather than whether tariffs will simply rattle markets. That shift helps explain why stocks have held up despite legal changes, policy adjustments, and unresolved trade relationships.
Oil now carries more weight than many tariff headlines because higher fuel and shipping costs can move through the global economy quickly. Those costs can affect household spending, business’ profit margins, and inflation expectations in a short period. That dynamic keeps investors focused on energy prices and interest rates as much as trade policy.
Fiscal and monetary policy continue to support the economy in 2026. The One Big Beautiful Bill Act (OBBBA) lowered both corporate and individual taxes, and estimates point to a net $127 billion boost for consumers.4 The Federal Reserve also cut its policy interest rate three times in late 2025, while markets still expect additional easing into 2026.
Households are also beginning to feel some of that support directly. Federal tax refunds are tracking almost 13% higher than in 2025, with roughly half of refunds still to come, while other household tax savings include a higher state and local tax deduction, a larger child tax credit, and new deductions tied to tips, overtime, seniors, and car loan interest. Those measures do not remove every pressure point, but they do help support spending while investors watch growth closely.
Consumers continue to provide one of the clearest sources of economic support. Recent data points to continued strength in air travel, restaurant bookings, retail activity, and income growth, while larger tax refunds are helping offset higher fuel and energy costs. Strong consumer spending matters because it helps support company sales and earnings growth across much of the market.
Corporate profits remain the strongest support for the stock market under President Trump. S&P 500 companies reported solid fourth-quarter 2025 results, with revenues increasing 9.2% and earnings rising 13.4%, well above initial analysts’ forecasts.1 Company commentary pointed to healthy demand from middle- and higher-income households, stable credit quality, and continued business investment, especially in technology.
Those fundamentals help explain why stocks have stayed resilient despite tariffs, conflict, and inflation concerns. “The equity market is still generally trending higher. That goes back to healthy fundamentals,” says Terry Sandven, chief equity strategist for U.S. Bank Asset Management Group. “Sustained earnings growth is crucial for supporting these valuations,” adds Rob Haworth, senior investment strategy director with U.S. Bank Asset Management Group.
Investors still need companies to deliver because valuations leave little room for disappointment. If inflation rises meaningfully and pushes interest rates higher, investors may assign lower values to future earnings. That link between profits, inflation, and interest rates will continue to shape stock market performance throughout 2026.
The market outlook for 2026 remains constructive, but investors still face real risks. Consumer spending, business investment, earnings growth, tax relief, and easier monetary policy continue to provide support, while slower job growth, elevated valuations, tariffs, inflation, geopolitical tension, and pockets of credit stress continue to create risk. That mix explains why investors remain constructive without expecting a straight path higher.
Midterm elections in November 2026 add another layer to the outlook. Elections can change expectations around taxes, regulation, trade, and fiscal policy even before lawmakers pass new legislation. Even so, earnings, inflation, and growth will likely drive longer-term market direction more than campaign headlines alone.
Investors often look at the stock market as a report card on a president. Presidential policy can influence returns, but it is rarely the only force at work. Economic growth, inflation, interest rates, corporate profits, and the stage of the business cycle usually play a larger role in stock market performance by president than politics alone. That helps explain why the stock market can post strong gains under either party and why the stock market under Trump, Biden, or prior administrations reflects more than White House policy.
The White House can shape the market backdrop, but it does not control the stock market. Stock prices reflect the value of businesses, and that value depends largely on earnings, growth expectations, and competitive strength. Interest rates also matter, but the Federal Reserve sets monetary policy independently. Presidents appoint the Fed Chair but do not have the power to fire Fed officials over policy disagreements. Presidents can propose tax, trade, and spending priorities, and they can influence sentiment in the short run through public statements, but Congress writes laws and must pass spending bills. Market reactions to political headlines often fade.
Over time, markets tend to follow a few core drivers. Interest-rate trends affect borrowing costs and stock valuations. Corporate earnings help determine how much investors are willing to pay for shares. Productivity growth can improve output and profit potential, while demographic trends influence labor supply and long-term economic growth. Inflation also matters because it shapes household purchasing power and the path of interest rates. These forces usually have a greater effect on long-term returns than any one administration.
The stock market, as measured by the S&P 500, generated a total return of 81.3% during President Trump’s first term, from 2017 to 2021. That ranked fourth for investor returns over a four-year presidential term.
Market performance during Trump’s presidency reflects both policy choices and broader economic conditions. In early 2025, proposed tariffs triggered a sharp selloff, with the S&P 500 falling nearly 20% by early April 2025. Investors responded more positively to the “One Big Beautiful Bill Act,” which included corporate and individual tax relief and was viewed as supportive for growth. Markets also paid close attention to Federal Reserve rate cuts in 2025. Together, tariffs, tax policy, and interest rates shaped the stock market under Trump more than any single development.
Politics often draws the headlines, but broader economic forces usually do more to shape market outcomes. Investors continue to monitor economic growth, inflation, and Federal Reserve policy because those factors influence earnings, borrowing costs, and valuations across the market. A recent question is whether advances in artificial intelligence (AI) can lift productivity enough to support stronger long-term growth. That theme has already become part of how investors assess the market outlook.
Markets rarely move for just one reason. Short-term swings can follow policy announcements, geopolitical events, or new economic data. Over longer periods, returns reflect the combined effect of growth, inflation, earnings, interest rates, and investor expectations. That is why investors are usually better served by focusing on the broader economic picture than by tying each market move to a single headline.
Investors should focus more on discipline than prediction in this environment. Trade headlines, geopolitical conflict, and interest-rate expectations can all trigger short-term swings, but profits, household support, and easier monetary policy still provide a constructive base for growth. Pullbacks and recoveries remain a normal part of investing rather than automatic signs of deeper weakness.
Investors should ask whether their portfolio still matches long-term goals, time horizon, and comfort with volatility. Our current recommendations call for revisiting risk tolerance, rebalancing toward target allocations, addressing diversification gaps, and using a phased approach to invest excess cash. That approach keeps the focus on long-term plan alignment instead of reacting to each new headline about the stock market under the Trump administration.
A thoughtful review with your U.S. Bank Wealth Management team can help investors separate temporary market noise from developments that truly change the long-term outlook.
The stock market under President Trump has produced gains despite sharp swings. Since the November 5, 2024 election, the S&P 500’s total return climbed 14.1% as of March 26, 2026.1
The stock market under President Trump has stayed resilient because profits and consumer demand have remained firm. Strong earnings growth, steady consumer spending, tax relief, and lower interest rates have helped offset pressure from tariffs, oil-price spikes, and geopolitical conflict. Those supports have given investors a stronger base than headlines alone suggest.
Shifting trade policies and fluctuating tariffs triggered volatility in the early months of President Trump’s second term, though markets since recovered. In 2025, the S&P 500 generated a total return of 17.9%. Year-to-date through March 26, 2026, the S&P 500 is down 5.10%. During the primary years of former President Biden’s four-year term (2021-2024), the S&P 500 generated a 57.8% total return. Trump’s first term (2017-2020) saw an 81.3% total return. Since 1980, Trump’s first term ranks fourth for investor returns over a four-year presidential term. The top three terms were: Ronald Reagan (1985-1988, 91.8%) Bill Clinton (1993-1997, +88.6%), and Clinton again (1997-2000, +88.6%).1
Investors should focus on discipline, not fast reactions. Review risk tolerance, rebalance if allocations have drifted, address diversification gaps, and consider phased investing if you are holding excess cash. That approach helps keep portfolios aligned with long-term goals even if volatility continues.
A look at historical equity market performance around midterm elections.
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