The stock market’s performance during President Donald Trump’s initial year back in the White House was the weakest among any president’s first year in office since George W. Bush began his second term in 2005.
From Trump’s inauguration until January 20, 2026, the S&P 500 index appreciated by 13.3%—a substantial gain by any measure. However, this represented the quietest start to a presidency over the past two decades. For contrast, the S&P 500 saw an advance of 24.1% in the first year of Trump’s initial term, according to CFRA Research data.
Equities surged last year, continuing the rally fueled by excitement surrounding artificial intelligence advancements. Meanwhile, international equities actually outperformed their U.S. counterparts for the first time in many years during 2025.
Naturally, the stock market doesn’t operate in isolation. Trump’s second term followed successive years where the S&P 500 growth surpassed 20% since the 1990s. This established a rather high benchmark for subsequent success.
Nonetheless, the past year was marked by significant policy disruptions originating from the Trump administration.
In April, stocks edged near bear market territory amid tariff-related uncertainty, only to bounce back sharply when Trump backed away from his most severe threats. The S&P index reached 39 record closing highs over the year. By comparison, the index hit a record 62 closing values in 2017, the inaugural year of Trump’s first presidency.
Trump appears attuned to market dynamics, treating the stock exchange as an indicator of his success. On Wednesday, he dismissed the recent market downturn, blaming it on ambiguity surrounding Greenland and tariffs, calling it a “small thing” and predicting the market would soon “double.” Later that day, he softened his stance on tariffs, leading to a rally in stocks.
U.S. stocks gained throughout 2025 amid enthusiasm for AI, optimism regarding Federal Reserve interest rate cuts, robust corporate earnings, and a resilient economy. Trump also enacted his “One Big Beautiful Bill Act” over the summer. The stimulative effect of this legislation might provide an additional lift to markets this year.
“The initial momentum from this stimulus is a primary driver behind the stock market’s strong showing in the first year of this term,” stated Matt Maley, Chief Market Strategist at Miller Tabak + Co, via email.
“This is why many investors believe the President wants to ‘let the economy run hot’ heading into the midterms,” Maley noted. “It doesn’t guarantee the second year will be as bullish for stocks as the first, but there’s no doubt the administration desires a very strong stock market this year, especially in the five or six months preceding the midterm elections.”
Strong Gains, Historic Volatility
Trump’s first year in his second term featured solid gains interspersed with periods of turbulence. Wall Street’s fear gauge, the VIX, spiked to historically elevated levels in the spring amidst anxiety over Trump’s tariff stances.
“The only truly exceptional aspect is that the VIX exceeded 50 for the first time since the pandemic began during the peak of trade policy uncertainty,” reported Nick Colas, co-founder of DataTrek Research, in an email.
Tim Thomas, Chief Investment Officer at Badgley Phelps Wealth Management, mentioned that he repositioned some client portfolios to be more “defensive,” reducing exposure to riskier assets, but ultimately chooses to overlook short-term volatility to concentrate on fundamentals like strong earnings growth, the AI boom, and supportive fiscal policy.
“Market performance last year was quite decent,” Thomas observed. “There is a substantial amount of policy uncertainty floating around. Political uncertainty is difficult to navigate because, by its very nature, it can shift in an instant.”
“You need some form of hedge,” Thomas concluded. “But the other critical element is to truly fixate on the long-term horizon and concentrate on the companies themselves and their underlying fundamentals. Ultimately, those are what drive returns.”
Discipline is Key to Success
Following three years of robust growth, Wall Street generally anticipates further gains for the S&P 500 this year. However, uncertainties abound. The U.S. dollar continues to face headwinds this year, while safe havens like gold and silver keep setting new record highs.
Jim Hagerty, CEO of Bartlett Wealth Management, told CNN that his main takeaway from the past year is the necessity for investors to maintain discipline.
“When markets were performing exceptionally well, or at times frighteningly, it can pull people away from their established disciplines,” Hagerty explained. “I would simply emphasize: maintain your discipline. And given how much ground has been gained, carefully review your asset allocation to ensure it remains appropriate, and rebalance if necessary.”
About the Author
