Stocks under the Trump administration: What is driving markets in 2026?

The stock market under President Trump remains resilient in 2026, even as geopolitical conflict, trade disputes and changing policy expectations have created sharp swings. A U.S. and Iran ceasefire agreement ¹ helped lift the S&P 500 to new record highs as investors anticipated lower energy costs and broader market participation. ² News reports of a one-page framework to restart U.S.-Iran negotiations, open the Strait of Hormuz and end the conflict pushed markets higher again.

Investors should not treat the market as a simple political scorecard. Since the 2024 presidential election, the S&P 500’s total return climbed more than 25% as of April 20, 2026, despite meaningful volatility along the way. ² “Investors have overcome concerns about geopolitical conflict and trade announcements and focused on fundamental strength, namely corporate earnings growth,” says Bill Merz, head of capital markets research for U.S. Bank Asset Management Group.

Earnings growth supports the stock market outlook under President Trump

The rally has also spread beyond the market’s largest companies. Smaller-company stocks have risen more than 66% from last April’s lows, which suggests confidence has broadened instead of depending on a narrow group of large stocks. ² Broader participation often gives investors more confidence that a rally has a stronger foundation.

Corporate profits remain the clearest support for the stock market under President Trump. S&P 500 companies increased fourth-quarter 2025 revenue by 9.2% and earnings by 13.4%, while first-quarter results are exceeding analyst expectations of 9.6% revenue growth and 13.0% earnings growth. ² Those fundamentals help explain why investors have continued to buy stocks despite higher oil prices, tariff uncertainty and persistent geopolitical risk.

Stock prices still need real business support. “The equity market is still 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.” Sandven says this serves as a reminder that companies need to keep growing profits because stock prices relative to earnings remain somewhat above long-term averages, leaving less room for disappointing earnings results.

Consumer spending keeps the market expansion on track

Consumer demand continues to give the stock market under President Trump an important base of support. U.S. consumer spending rose 5.7% year over year through March, incomes rose 3.7%, ³ and economists still expect about 2.2% real economic growth in 2026, comparable to 2025’s growth rate. ² Those figures show that households continue to spend even as higher energy prices and policy uncertainty create pressure.

High frequency data also point to resilient spending trends. Johnson Redbook weekly retail sales and Fiserv’s point-of-sales data validate continued strong spending growth, with recent readings in the 6-8% growth range. Investors continue to watch those measures because consumer activity drives a large share of economic growth and supports corporate revenue across many industries.

Tax relief and lower interest rates have also helped support growth. The One Big Beautiful Bill Act (OBBBA) lowered corporate and individual taxes, and federal tax refunds were running approximately $47 billion higher than in 2025 through April 24. ⁴ Earlier Federal Reserve rate cuts also helped support borrowing and spending, giving investors another reason to maintain a constructive market view.

How Iran and oil prices affect stocks under President Trump

Iran and oil prices now drive many of the market’s biggest short-term swings. About one-fifth of the world’s oil normally passes through the Strait of Hormuz, so any disruption can quickly raise fuel costs, increase inflation pressure, and weigh on growth expectations. ⁵ Despite the ceasefire and President Trump’s announced Project Freedom to guide certain ships through the Strait, traffic remains at a virtual standstill, keeping energy prices at the center of the market outlook.

Inflation data already show the pressure from higher energy prices. The Producer Price Index rose 0.5% in March and 4% from a year earlier, while energy prices rose 8.5% in the month and gasoline prices jumped 15.7%. ⁶, framed the issue directly: “The key market question is not whether conflict creates headlines,” says Tom Hainlin, senior national investment strategist for U.S. Bank Asset Management Group. “It is whether higher energy prices last long enough to slow growth, lift inflation, and change the path for interest rates.”

Higher inflation can also change how investors value stocks. If inflation rises enough to push interest rates higher, investors may pay less today for earnings they expect companies to generate in future years. That relationship among profits, inflation and interest rates will continue to shape stock market performance throughout 2026.

Tariffs, tax cuts, and Fed policy shape market performance

Tariffs still deserve attention, even though they no longer dominate investor focus the way they did earlier in the cycle. The Supreme Court voided most 2025 tariffs imposed under one legal authority, and the administration later announced a temporary 10% global tariff while it explored other options. According to Treasury Secretary Scott Bessent, tariffs could return to prior levels by early July, keeping trade policy on investors’ watch list.

Investors now appear more focused on lasting economic effects than on headline shock alone. The key question is whether tariffs materially change growth, inflation, and company profits, not whether they trigger another short-lived burst of market volatility. That shift helps explain why stocks advanced through legal changes, policy adjustments, and continued trade uncertainty.

Fiscal and monetary policy continue to support the economy as well. The One Big Beautiful Bill Act lowered both corporate and individual taxes, and estimates point to a net $127 billion boost for consumers. ⁷ Recent price pressures have led markets to expect no additional interest rate easing in 2026 after the Federal Reserve cut its policy interest rate three times in late 2025. ⁸

Stock market outlook under President Trump: What investors should do now

The 2026 outlook still looks constructive, but it also includes real risks. Consumer spending, business investment, earnings growth, tax relief, and easier monetary policy continue to support stocks. High stock prices, tariffs, inflation, geopolitical tension, and pockets of credit stress could challenge confidence, while midterm elections in November 2026 may add more short-term volatility.

Investors can respond more effectively with discipline than prediction. A practical approach starts with reviewing whether your portfolio still matches long-term goals, time horizon, and comfort with market swings. Investors may also want to rebalance their portfolios if allocations have drifted and invest extra cash gradually instead of all at once.

That approach keeps attention on long-term plan alignment rather than on each new headline about the stock market under the Trump administration. Market volatility can create discomfort, but it can also create opportunities for investors who have a clear plan and a diversified portfolio. 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.

Presidents and the markets

How do presidential administrations influence stock market performance?

Investors often look at the stock market as a report card on a president, but that view is too narrow. Presidential policy can influence returns through taxes, trade, regulation, and public messaging. Over time, economic growth, inflation, interest rates, corporate profits, and the stage of the business cycle usually matter more than politics alone.

Why isn’t the stock market controlled by the White House?

The White House can shape the backdrop, but it does not control stock prices. Investors value stocks based on what they expect companies to earn over time, and those expectations depend much more on profits, growth, and competition than on a single policy headline. Presidents appoint the Fed Chair but do not have the power to fire Fed officials over policy disagreements. The Fed also sets monetary policy independently, and Congress still must turn many proposals into law.

What economic forces tend to matter most to markets over time?

Markets usually follow a core group of long-term drivers. Interest-rate trends affect borrowing costs and stock prices, inflation affects household buying power and rate expectations, and corporate earnings help determine how much investors are willing to pay for shares. Productivity growth and demographic trends also matter because they shape long-term economic output.

How did the stock market perform during Donald Trump’s first term as President?

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 since 1980. ¹The number is strong, but it still reflects the full economic environment of that period, not White House policy alone.

What’s influenced market performance during Trump’s presidency?

Corporate earnings growth has been the predominant factor driving stock markets to new all-time highs, although market performance during Trump’s presidency also reflects policy choices. In early 2025, proposed tariffs helped trigger a sharp selloff, with the S&P 500 falling nearly 20% by early April 2025, while investors later responded more positively to tax relief and Federal Reserve rate cuts. ¹ Together, tariffs, tax policy, and interest rates shaped the market more than any single headline.

What are the broader economic impacts shaping market outcomes?

Politics often drives headlines, but broader economic forces usually do more to shape market outcomes. Investors continue to watch economic growth, inflation, and Fed policy because those forces influence company profits, borrowing costs, and stock prices across the market. Investors are also weighing whether advances in artificial intelligence can support stronger long-term productivity and growth.

Why no single factor explains market performance

Markets rarely move for just one reason. A policy shift, a war headline, or a major economic report can move prices in the short run, but longer periods reflect the combined effect of growth, inflation, earnings, interest rates, and investor expectations. That is why investors usually make better decisions when they focus on the broader economic picture instead of linking every market move to one event.

FAQs

How has the stock market performed under President Trump’s second term so far?

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 nearly 30% as of May 6, 2026. ²

Why has the stock market under President Trump stayed resilient?

The stock market under President Trump has stayed resilient because profits and consumer demand have held up. Consumer spending is still growing, earnings expectations remain strong, and tax relief and lower interest rates continue to support the economy. Those supports have helped offset pressure from tariffs, oil-price spikes, and geopolitical conflict.

How does today’s stock market’s performance compare to other Presidential terms?

Shifting trade policies and fluctuating tariffs triggered volatility in the early months of President Trump’s second term, though markets have since recovered. In 2025, the S&P 500 generated a total return of 17.9%. Year-to-date through April 20, 2026, the S&P 500 is up 4.23%. During the primary years of former President Biden’s four-year term (2021-2024), the S&P 500 generated a 66.3% 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 (1993-1996, +88.6%), and Clinton again (1997-2000, +88.6%). ¹

How should investors approach the stock market under President Trump in 2026?

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.