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

The stock market under President Trump has remained resilient in 2026, even as investors weigh risks. Geopolitical conflict, shifting trade policy, inflation pressure and changing Federal Reserve expectations have all contributed to market volatility. Yet stocks have continued to find support from corporate earnings growth, strong consumer spending and investor confidence that the long-term path remains constructive.

Since the 2024 presidential election, the S&P 500’s total return climbed nearly 30% as of June 24, 2026, despite meaningful volatility along the way. ¹ “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 expanded beyond the market’s largest companies, giving investors a broader base to evaluate. Smaller-company stocks have risen more than 73% from the April 2025 lows as of June 24, 2026, which points to improving confidence across more areas of the market. ¹ Broader market participation can help boost investor confidence that gains rest on more than a narrow group of large technology-oriented stocks.

Corporate profits remain the clearest support for the stock market under President Trump. S&P 500 first quarter revenues increased by 12%, modestly above expectations for 10% growth, while earnings increased by 28%, more than double the forecast at the start of the reporting season. ¹ Those results help explain why investors have continued to buy stocks despite elevated energy costs, tariff uncertainty and persistent geopolitical risk.

Stock prices still need real business support, especially after a strong rally. “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’s view underscores a practical investor point: companies need to keep growing profits because stock prices remain somewhat high relative to earnings, leaving less room for disappointment.

Consumer spending and tax relief help sustain market performance

Consumer demand provides important support the stock market under President Trump. U.S. consumer spending rose 6.3% in May from a year earlier, according to the Bureau of Economic Analysis. ² Wage growth also remains positive, rising 3.6% from a year earlier, ³ while economists still expect about 2.1% real economic growth in 2026, matching 2025’s growth rate. ¹ Those figures show that households continue to spend even as higher energy prices and policy uncertainty create pressure.

More frequent spending measures also point to resilient consumer activity. Johnson Redbook’s weekly general merchandise and apparel sales and Fiserv’s broader SpendTrend point-of-sales data show continued spending growth, with recent readings in the 7% to 9% range. Investors watch consumer spending closely because it drives a large share of U.S. economic growth and supports company revenue across many industries.

The labor market also rebounded so far in 2026. Average monthly payroll growth of 114,000 through May this year supports consumer behavior compared to the relatively low 2025 monthly average of 10,000. Weekly initial jobless claims also remain low by historical standards.

Tax relief and prior interest rate cuts have also supported the expansion. The One Big Beautiful Bill Act (OBBBA) lowered corporate and individual taxes, with estimates pointing to a net $127 billion boost for consumers ⁴ and federal tax refunds running approximately $57 billion higher than in 2025 through June 24. ¹ Federal Reserve rate cuts in 2024 and 2025 also helped support borrowing and spending, giving investors another reason to maintain a constructive market view.

Iran, oil prices and inflation remain key market risks

Geopolitical conflict can quickly move from headline risk to economic risk when it affects energy supplies, shipping routes or inflation expectations. The Iran conflict has drawn investor attention because the Strait of Hormuz remains a major route for global oil and liquefied natural gas shipments. ⁵Higher energy prices can pressure consumers, raise business costs and complicate the Federal Reserve’s effort to bring inflation closer to its long-term goal.

Inflation data already show the pressure from higher energy prices. Consumer prices rose 4.2% in May from a year earlier, driven by a 41% increase in gasoline prices, while core consumer prices, which exclude food and energy, rose 2.9%. ³ “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.” Recently, market-based inflation expectations embedded in interest rate markets fell with oil prices, as confidence rose that shipping through the Strait of Hormuz would begin normalizing.

Tariffs, Federal Reserve changes and national debt add market variables

Tariffs still deserve attention, even though they no longer dominate investor focus the way they did early last year. 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. Investors appear more focused on whether tariffs materially change growth, inflation and company profits than on whether each policy announcement triggers another short-lived burst of volatility.

Federal Reserve (Fed) leadership and communication changes add a new variable to the market outlook. New Fed Chair Kevin Warsh signaled less reliance on forward guidance, while the Fed reviews its communications, balance sheet policy, inflation framework and data sources. Some believe less Fed forward guidance may make future policy harder for investors to anticipate, although a repeated commitment to price stability from Chair Warsh initially encouraged investors that inflation risks should fall.

Deficits and national debt add a longer-term policy variable to the market outlook. U.S. national debt totals $39.2 trillion, and higher interest rates have increased the cost of financing federal debt. Markets have not treated current debt levels as an immediate crisis, but investors continue to watch whether rising debt eventually requires higher interest rates to attract enough Treasury buyers.

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

The 2026 outlook still looks constructive, but it includes real risks. Consumer spending, business investment, earnings growth and tax relief continue to support stocks. High stock prices, tariffs, inflation, geopolitical tension, changing Federal Reserve communication 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 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 June 24, 2026. ¹

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.