Will Trump Be Good for the Stock Market

Will Trump Be Good for the Stock Market

Keyword note: This article repeatedly addresses the question "will trump be good for the stock market" in an objective, data‑forward way for investors and crypto market participants.

Brief summary

Investors asking "will trump be good for the stock market" are usually asking whether a Trump presidency and its policy agenda will tend to raise equity prices, reduce volatility, or improve corporate profits over relevant horizons. The answer is not a simple yes/no: presidential effects operate through policies (fiscal, trade, regulatory), market expectations and sentiment, and macroeconomic feedbacks (growth, inflation, interest rates). Short‑term sentiment can push markets quickly; longer‑term structural effects depend on actual adopted policies and global conditions. This article walks through historical evidence, transmission channels, recent 2024–2025 episodes, and scenario‑based implications for investors.

As of Dec. 29, 2025, this analysis draws on contemporary reporting and empirical papers to keep the context current.

Background and scope of the question

When people ask "will trump be good for the stock market" they often conflate several related concepts:

• Market performance measures: total return of broad indexes (S&P 500, Nasdaq Composite, Dow Jones Industrial Average), versus small‑cap indexes (Russell 2000), sector returns, and risk‑adjusted measures.
• Timeframes: immediate (days to months around announcements), cyclical (quarters to a couple of years), and structural (multi‑year changes in regulation, trade or tax systems).
• Drivers: realized policy changes versus market expectations and the Federal Reserve's reactions.

This article focuses primarily on U.S. public equities but references how presidential policy can influence crypto and other asset classes. We examine Trump's first term (2017–2021), his return to the presidency in 2024/2025 and market episodes through late 2025, and the plausible channels (fiscal, trade, regulation, appointments) by which policy affects prices.

Key market measures used below include S&P 500 total return, Nasdaq performance, Dow Jones, and sector indices (financials, energy, technology, industrials, materials). Short‑term sentiment is often visible in intra‑day and weekly volatility; structural effects require multi‑year data.

Historical performance under Trump

Answering "will trump be good for the stock market" benefits from looking at past market performance under Trump as one input — acknowledging that attribution is imperfect because many forces (global cycles, technology, monetary policy) act simultaneously.

Major 2017–2021 market outcomes

During Donald Trump’s first term (2017–2021), U.S. equities posted strong returns on major indices. Corporate tax cuts enacted in late 2017 (the Tax Cuts and Jobs Act) improved after‑tax profitability for many firms and supported buybacks and higher earnings per share, which helped lift stock valuations. Deregulatory actions in some sectors (notably energy and financials) reduced compliance costs for certain companies and were perceived positively by markets.

These outcomes do not imply the presidency alone caused the gains: monetary policy, a continuing expansion after the 2016–2017 recovery, and secular technology trends (cloud, software, advertising, later AI) were major contributors.

Market behavior since re‑election (2024/2025 onward)

As of Dec. 29, 2025, markets have shown episodes of both strong gains and sharp volatility following the 2024 election and early policy moves. Major documented episodes include:

• Policy optimism rallies tied to pro‑innovation and pro‑crypto legislation, including stablecoin and crypto clarity (see section on stablecoins below).
• Sharp selloffs associated with large tariff announcements in April 2025 that coincided with a ~19% drop in the S&P 500 from recent highs, according to contemporary market reports. After that plunge, the index recovered because other growth drivers — notably strong AI‑related capital investment — supported activity and corporate earnings.

These moves illustrate that market reactions to a presidency can alternate between optimism (tax/regulatory clarity, pro‑business appointments) and harsh repricing when disruptive trade or geopolitical measures increase uncertainty.

Transmission channels — how presidential policies affect markets

A presidency affects markets through multiple, interlinked channels. Understanding these channels helps answer whether "will trump be good for the stock market" is likely under different policy mixes.

• Fiscal policy: tax cuts or spending programs change after‑tax earnings and aggregate demand.
• Trade policy: tariffs and trade barriers alter costs, supply chains and multinational earnings.
• Regulation/deregulation: sectoral rules change compliance costs and project economics.
• Labor/immigration policy: influence labor supply, wages and inflationary pressure.
• Appointments: Fed governors and securities regulators shape monetary policy and market oversight.

Fiscal policy and corporate taxes

Corporate tax changes directly affect after‑tax profits and cash flow available for investment, dividends and buybacks. The 2017 tax cuts in the U.S. increased after‑tax profits for many corporations, contributing to share buybacks and higher EPS in subsequent years. Market participants often price in the expected benefit of lower corporate tax rates quickly; the realized impact depends on how firms deploy extra cash and on broader demand conditions.

Tax‑funded fiscal stimulus can boost GDP and boost cyclical sectors, but larger deficits can influence long‑term interest‑rate expectations, which may compress equity valuation multiples if rates rise.

Trade and tariff policy

Tariffs raise input costs for importers, reduce global trade volumes, and can depress profit margins for export‑oriented firms. Broad or unilateral tariff programs increase policy uncertainty and can cause sectoral winners (domestic‑focused industries) and losers (exporters, global supply chain firms). As reported in 2025, tariff announcements were linked to sharp market volatility and a significant S&P 500 pullback in spring 2025.

Tariffs can also shift investment patterns: firms may re‑shore production or invest to avoid tariffs, which can create short‑term capex boosts but reduce global efficiency and raise consumer prices over time.

Regulation and business environment

Deregulation tends to lower compliance costs and can spur investment in affected sectors (e.g., energy, financials). Conversely, increased oversight (environmental, data/privacy, consumer protection) can raise costs for some sectors while strengthening long‑run resilience. Markets react not only to the rules themselves but to the predictability and quality of enforcement.

Labor and immigration policy

Stricter immigration and labor policies can tighten labor supply in sectors reliant on foreign labor, pushing wages up and adding inflationary pressure. That may be positive for workers but negative for margin‑sensitive businesses, especially those with limited pricing power.

Monetary policy interaction

Presidential actions that change inflation or growth expectations influence the Federal Reserve’s policy path. If presidential policies raise inflation or overheating risks, the Fed may tighten (raising rates), which tends to lower equity multiples. If fiscal or trade policy dampens growth, the Fed may ease, supporting multiples. Appointments to the Fed and regulators also matter for long‑run expectations.

Market reaction and investor sentiment

Markets are forward‑looking and often move on expectations. The question "will trump be good for the stock market" is as much about investor belief in future policy as about realized outcomes.

Initial policy optimism (for example, pricing in tax cuts or deregulation) can lift markets before policies are enacted. Conversely, policy actions that appear disruptive (large tariffs, sudden restrictions) can cause immediate repricing and elevated volatility. Sentiment swings can amplify short‑term moves beyond the underlying economic effect.

Role of expectations vs. realized policy

Markets often rally on expected pro‑business measures even before they are enacted. If realized policy deviates (e.g., tariffs are larger than expected), markets can reverse. The gap between expectation and realization is a major source of short‑term risk.

Asset class and sector differences

Presidential policy effects are heterogeneous. Historically under pro‑business and deregulatory postures, sectors like energy, financials and small caps have outperformed. Exporters, global supply chain firms and multinational manufacturers tend to underperform under aggressive tariff regimes. Tech and AI leaders may benefit from pro‑innovation signals but can be vulnerable to higher rates that compress high growth valuations.

Macroeconomic consequences relevant to markets

Beyond sectoral impacts, presidential policy influences macro variables that feed into equity valuations: GDP growth, unemployment, inflation and interest rates.

Inflation and interest‑rate risk

Trade restrictions (tariffs) and tight labor markets can push inflation higher. Higher inflation raises nominal interest rates over time, and a higher policy rate path is generally negative for equity valuation multiples — especially growth stocks with earnings far in the future.

Recent 2025 reporting showed higher inflation concerns following tariff announcements and labor market tightness. As of Dec. 26, 2025, central bankers and market participants were attentive to these dynamics when assessing valuations.

Growth vs. distribution trade‑offs

Certain policies can create an immediate demand or investment boost (fiscal stimulus, corporate tax cuts) that raises GDP and corporate earnings in the short term. However, higher deficits, trade frictions, or structural inefficiencies may raise long‑term risks. Investors should weigh short‑run gains against longer‑run fiscal and trade sustainability.

Empirical evidence and research findings

Academic and industry research comparing presidential terms finds substantial variation across administrations. Cross‑presidential return comparisons often show that markets perform strongly in times of accommodative monetary policy, strong global growth, or major technological advances — factors that may be independent of the president.

Research on tariff episodes finds that broad trade barriers raise input costs and reduce global trade, with negative effects on exporters and supply‑chain dependent firms. Meanwhile, tax‑cut episodes typically provide an earnings boost but can also widen deficits.

As of Dec. 29, 2025, major investment firms and outlets (JPMorgan, T. Rowe Price, The Economist, The New York Times, Motley Fool) had published analyses noting both the market gains under recent policy clarity (including crypto and stablecoin frameworks) and the downside risks from tariff‑driven uncertainty.

Important caveat: correlation does not equal causation. Global cycles (China growth, commodity cycles), rapid technological adoption (AI in 2023–2025), and Fed policy have been powerful drivers alongside presidential policy.

Risks, uncertainties, and counterarguments

Primary risks to markets associated with a Trump‑era policy mix include:

• Trade escalation and retaliatory measures that reduce global trade volumes and corporate margins.
• Higher inflation leading to a tighter Fed and lower equity multiples.
• Policy unpredictability that increases risk premia and compresses valuations.
• Geopolitical spillovers that raise risk aversion.

Counterarguments and potential market positives include:

• Deregulation and corporate tax reductions that lift after‑tax profits and support buybacks and M&A.
• Pro‑innovation and pro‑crypto regulatory clarity that can unlock institutional flows into new asset classes, as seen in 2025 with stablecoin market growth.
• Appointments to regulatory agencies that prioritize market‑friendly approaches and faster approvals.

Both sets of effects can coexist and produce volatile, sector‑specific outcomes.

Scenario analysis and likely market outcomes

To answer "will trump be good for the stock market" in practice, consider three plausible scenarios:

• Bullish (pro‑growth/deregulatory, contained trade frictions): corporate taxes remain lower, deregulation is targeted, trade tensions are eased or limited — valuations expand, cyclical sectors and small caps outperform, and investor risk appetite rises.

• Bearish (protracted tariff regime, rising inflation): broad tariffs persist, inflation rises, Fed tightens — multiples compress, exporters and tech with global supply chains underperform, safe havens and commodity plays outperform.

• Mixed/volatile (episodic policy swings): episodic tariffs and selective deregulation create headline‑driven volatility; investors rotate between defensive and cyclical sectors, with elevated equity dispersion.

Each scenario implies different sector tilts and risk management priorities.

Investment implications and strategies

This analysis is informational and not investment advice. Investors answering "will trump be good for the stock market" should align decisions with their risk profile and time horizon.

General considerations:

• Maintain diversified core allocations rather than attempting to time short‑term political moves.
• Consider sector tilts depending on policy outcomes: financials, energy and small caps may benefit from deregulatory/tax‑friendly regimes; exporters and global tech may be vulnerable under tariffs.
• Hedge inflation/interest‑rate risk via real assets or inflation‑sensitive allocations if tariffs and tight labor markets push inflation higher.

Practical considerations for retail investors

• Avoid emotional selling on headline volatility; review asset allocation and re‑balance to long‑term targets.
• Consider time horizon: short‑term trading around policy announcements is high‑risk and requires expertise.
• For crypto exposure, use regulated platforms and wallets. Bitget's exchange and Bitget Wallet provide on‑ramp options and custody features for users seeking regulated access to crypto assets (note: this is product information, not investment advice).

Market episodes and the crypto link: 2025 stablecoins and crypto policy

Recent policy moves in 2025 illustrate how presidential decisions can boost certain asset classes beyond equities. As of Dec. 29, 2025, according to Decrypt, the stablecoin market capitalization surged 49% in 2025 to about $306 billion, driven by regulatory clarity and institutional adoption following the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), signed in July 2025. That law created a federal framework for stablecoins, and regulators began issuing provisional banking charters to major issuers, helping institutional integration.

The passage of the GENIUS Act and subsequent regulatory steps reduced uncertainty for certain crypto market participants, which provides an example of how legal clarity from the executive and legislative branches can materially affect asset prices and market participation. At the same time, other crypto risks (reserve composition for some stablecoins) attracted scrutiny, showing heterogeneous outcomes across issuers.

This episode highlights that presidential policy can be an important determinant of cross‑asset flows: clarity can attract institutional capital, while disruptive trade or macro policy can push investors toward safe havens (gold surged in 2025, per market reports).

Public and expert debate

Media and institutional views are split on whether a Trump presidency is broadly positive or negative for markets. Supportive analyses emphasize historical equity gains during pro‑business policy periods and benefits from regulatory clarity in areas like crypto. Critical analyses warn about tariff risks, inflationary pressure, and policy unpredictability. As of late 2025, major outlets including The New York Times, The Economist, Reuters, Motley Fool and T. Rowe Price had published commentary reflecting both sides of the debate.

See also

• Presidential influence on markets
• Tariffs and trade policy
• Monetary policy and Federal Reserve independence
• Tax policy and corporate finance
• Market volatility and political risk
• Crypto regulation and stablecoins (GENIUS Act)

References and further reading

Note: citations below are to named reporting and institutional commentary used for contextual facts. Reporting dates are included to reflect timeliness.

• As of Dec. 29, 2025, Decrypt reported on the GENIUS Act and the stablecoin market surge in 2025 (stablecoin market cap up ~49%).
• As of Dec. 26–29, 2025, financial press (Motley Fool, Reuters, assorted analyst notes) reported on the SP 500’s 2025 performance, tariff announcements in April 2025 and subsequent volatility.
• JPMorgan, T. Rowe Price and other investment firms published 2025 notes on AI‑led capex and macro outlook referenced in this article (as of late 2025).
• Historical studies comparing presidential terms and market returns (academic finance literature summarized in mainstream reporting).

Readers should consult the original reports from the named organizations and peer‑reviewed research for deeper empirical analysis.

Risks and limitations

Attribution is inherently difficult — many contemporaneous forces shape markets. This article distinguishes where factual reporting is used (citations above) and where interpretation is applied. It does not provide investment advice.

Appendix: Data appendix and methodological notes

Suggested time series and charts to include in an expanded edition:

• S&P 500 total return by presidential term (monthly series).
• Sector returns around key policy announcements (tariff announcements, tax reform, GENIUS Act enactment).
• U.S. CPI, PCE and Fed funds rate path (2016–2025).
• Stablecoin market capitalization and issuer reserve composition (2024–2025).

Methodological notes on measuring "good for the stock market":

• Total return (price + dividends) is the canonical metric for equity performance.
• Risk‑adjusted returns (Sharpe ratio) and drawdown statistics capture volatility and investor pain.
• Sector dispersion and cross‑asset correlations indicate whether gains are broad‑based or concentrated.

Caveats: short‑term moves around policy announcements often reflect sentiment and expectation adjustments rather than full economic realization of policy.

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This article is informational and does not constitute investment advice. It summarizes public reporting and research as of late 2025; specific outcomes depend on realized policies and macro developments.