The stock market during President Donald Trump’s first year of his second term has emerged as the weakest among any president’s initial year since 2005, when George W. Bush began his second term. The S&P 500 saw a 13.3% gain from Trump’s inauguration day through January 20, 2026. Although this figure represents healthy growth by typical standards, it marks the lowest start to a presidency in two decades, especially when compared to a robust 24.1% increase during Trump’s first term.
While stocks experienced substantial growth in the past year, fueled by excitement around advancements in artificial intelligence, international stocks outperformed U.S. equities for the first time in several years in 2025. Factors influencing the market’s dynamics included Trump’s second term following the S&P 500’s remarkable back-to-back annual gains exceeding 20%, setting a high bar for subsequent performances.
The past year was characterized by volatility and policy changes from the Trump administration. The stock market dipped near bear market territory in April due to uncertainty surrounding tariffs. However, it rebounded sharply after Trump eased threatening trade measures. Furthermore, the S&P 500 achieved 39 record highs during this period, a decrease from the 62 record highs it reached in 2017.
Trump has voiced attention to the stock market’s movements, seeing them as a reflection of his administration’s success. He commented that a recent market dip due to uncertainties around tariffs was negligible and expressed confidence in the market’s recovery. His subsequent retreat from stringent tariff measures correlated with a market rebound.
Across 2025, U.S. stocks garnered gains, spurred by enthusiasm regarding artificial intelligence, optimistic expectations of Federal Reserve interest rate cuts, and strong corporate earnings. Trump also enacted the “One Big Beautiful Bill Act,” which is anticipated to provide a stimulus that could further enhance market conditions.
Market analysts, like Matt Maley of Miller Tabak + Co, highlighted that the stimulus measures significantly supported the stock market in its inaugural year during this term. Maley pointed out that there is anticipation for a strong market performance, particularly as the midterm elections approach, even though uncertainty looms regarding the sustainability of such gains.
The year was met with increased volatility, notably as Wall Street’s fear gauge, the VIX, spiked to unprecedented levels in the spring amid trade policy disturbances. Nick Colas, co-founder of DataTrek Research, noted that the VIX surpassed 50 for the first time since the pandemic, underscoring the market’s tumultuous landscape.
In light of ongoing fluctuations, investment professionals like Tim Thomas from Badgley Phelps Wealth Management have adjusted their strategies to adopt a more defensive posture, reducing exposure to riskier assets while maintaining a long-term focus. Thomas emphasized the importance of strong earnings growth and the AI revolution alongside supportive fiscal policies, despite the inherent uncertainties surrounding policy changes.
As many on Wall Street anticipate continued climbs for the S&P 500, challenges remain, particularly concerning the struggling U.S. dollar and the rising safe-haven assets like gold and silver reaching record levels. Jim Hagerty, CEO of Bartlett Wealth Management, advised investors to remain disciplined amidst these fluctuations, encouraging them to reassess their asset allocations and ensure they align with their long-term investment strategies.
