For better or worse, investors are living through Trump’s stock market. Here’s why
President Donald Trump is considered the ultimate stock market president, overseeing expansion to multiple record highs while serving as a catalyst for major declines.
In the first two months of Trump’s second term, S&P 500 It experienced one of the steepest declines into correction territory since World War II, driven primarily by uncertainty surrounding tariff policies. Less than a month after the president’s “liberation day” tariff announcement, the index nearly closed in bear market territory. A correction is defined as a decline of at least 10% but less than 20% from a recent high, while a bear market is defined as a decline of at least 20% or more on a closing basis.
But the market also rebounded faster than the norm under Trump.
In the case of S&P 500 pullbacks of 5% to 9.9% from its peak, the two pullbacks that have occurred since early 2025 have reversed faster than the 34-day average, according to CFRA Research. This is a better rate of recovery compared to the administrations of other presidents dating back to Ronald Reagan in 1981.
“Bull markets take the stairs, while bear markets take the elevator,” said Sam Stovall, chief investment strategist at CFRA Research. “In Trump 2.0, we see overall lower volatility and an above-average recovery from sharp selling.”
CFRA found that the most recent recovery in Trump’s second term (the S&P 500 rebounding from a 9.1% decline in just 16 calendar days) was one of the fastest recoveries since World War II and the ninth-fastest recovery.
“What’s keeping investors pretty optimistic is the earnings growth,” Stovall said.
A new era
FactSet data shows the S&P 500’s first-quarter earnings rose more than 20% on a yearly basis. This is close to the strongest profit growth since the fourth quarter of 2021.
Iran and the United States agreed to a ceasefire last month, easing concerns that oil prices would remain high and put upward pressure on prices. But that ceasefire has become increasingly fragile, with Trump saying this week that the ceasefire was “on life support.”
“The news is being overshadowed by the charts,” said Ryan Detrick, Chief Market Strategist at Carson Group. “We’re in a very headline-driven world, a headline-driven market, and investors have had to kind of hang on, ride the roller coaster and go along with it.”
Detrick argues that a global bull market for stocks still exists and may be on the younger side of its lifespan. From here, he thinks investors would be better served buying the dip.
“I don’t know that we’ve ever had a market that focuses so much on the daily news coming out of the White House,” he said. “Under President Trump, I think this volatility is exactly what we need to get used to.”
This marks a generational change on Wall Street. In recent years, investors, especially those who came of age in the wake of the global financial crisis, have been conditioned to use major market declines as buying opportunities.
“FOMO is a very real thing for an institutional investor,” said Steve Sosnick, chief strategist at Interactive Brokers.
Sosnick found that those who sold on Trump’s tax announcement last year and were slow to buy back their shares underperformed those who didn’t. This, he said, has now led to “a general reluctance on the part of institutions to sell too aggressively across the board.”
“We might be a little too behind or a little too confident when we get positive talk from management,” the strategist told CNBC.
‘Don’t fight with the White House’
Investors are so focused on announcements from the White House that Trump has been a key driver of the market’s five best and worst days since his return to office, according to Fundstrat data.
The S&P 500’s best day since Trump became president again was April 9, 2025. It rose more than 9 percent after pausing its widespread tariffs. The indicator’s worst day occurred on April 4, 2025, after China retaliated with its own tariffs on US goods.
According to Fundstrat, no U.S. president in nearly half a century has been responsible for so many of the market’s best and worst days during their time in office. Without Trump’s best five days of his second term, the S&P 500 would be only 1% higher since his inauguration. This is in contrast to the index’s 23.5% increase since its opening date.
“No other president has had this level of control over fortunes made in the stock market,” Hardika Singh, economic strategist at Fundstrat Global Advisors, said in an interview.
“The only strategy investors should follow is not to fight with the White House because you will lose and you will not make any money,” he said. “Throw away your old investment playbook.”
Matt Gertken, chief geopolitical strategist at BCA Research, said Trump’s communication style, sometimes rapid-fire posts on social media, has fueled market volatility and changed the way future presidents deliver messages to Wall Street.
“Social media is like the name of the game now,” Gertken said. “Even a president who comes in and tries to implement a very steady and routine style of communication may have to adopt some of Trump’s standards later because of the situation he’s in.”
Whether or not future presidents adopt a truly Trumpian style of communication, the market will remain volatile. According to Gertken, if future presidents remain quieter on social media, the market “will remain shaky and indecisive due to speculation.” But if they speak frequently like Trump, the market will fluctuate based on their latest statements.
“There is no turning back,” he said.
