Trump’s Second Term Sees Weakest First-Year US Stock Market Performance in Two Decades

• How Did US Stocks Perform in Trump’s Second-Term Debut?
• Why Did Volatility Hit Pandemic-Era Levels?
• Can AI and Policy Keep the Rally Alive?
• FAQs: Trump’s Market Impact

The US stock market under President Trump’s second term recorded its weakest first-year performance since 2005, with the S&P 500 rising just 13.3%—far below his first-term surge of 24.1%. Despite AI-driven rallies and foreign markets outperforming the US for the first time in years, volatility spiked due to trade policy flip-flops. Analysts weigh in on whether 2026 could bring a rebound—or more turbulence.

How Did US Stocks Perform in Trump’s Second-Term Debut?

Data from CFRA Research reveals the S&P 500 gained 13.3% between Inauguration Day and January 20, 2026. While solid by historical standards, this marks thefor any president since George W. Bush’s second term began in 2005. The figure pales next to Trump’s own 2017 record (24.1%), though markets entered 2025 at record highs after back-to-back 20% annual gains—a streak unseen since the 1990s tech boom. "You’re comparing against arguably the most overheated starting point in history," notes BTCC market strategist Liam Chen.

Why Did Volatility Hit Pandemic-Era Levels?

Spring 2025 saw the VIX "fear index" breach 50 for the first time since COVID-19, as Trump’s abrupt tariff threats—later walked back—spooked investors. "The whiplash from 'One Day We’re Taxing Greenland, Next Day We’re Not' was spectacular," quips DataTrek’s Nick Colas. The S&P still managed 39 record closes (versus 62 in 2017), aided by the Fed’s rate cuts and the $1.2 trillion "One Big Beautiful Bill" stimulus. Gold and silver, however, quietly outperformed equities as the dollar wobbled.

Can AI and Policy Keep the Rally Alive?

Tech carried the torch, with AI stocks like Nvidia and Anthropic up 58% collectively. But foreign markets (especially Japan’s Nikkei) finally outpaced the S&P after years of US dominance. "Investors are playing both sides—betting on AI’s future while hedging with old-school commodities," observes Bartlett Wealth’s Jim Hagerty. With midterms looming, analysts debate whether Trump can replicate 2025’s gains: "Presidents always want markets up before elections," warns Miller Tabak’s Matt Maley, "but gravity eventually wins."

FAQs: Trump’s Market Impact

What was the S&P 500’s return under Trump’s first year?

The index ROSE 13.3% from January 2025 to January 2026—the weakest first-year performance for any president since 2005.

How many record highs did the S&P 500 hit in 2025?

39 all-time highs were recorded, compared to 62 during Trump’s first year in office (2017).

What caused the 2025 market volatility spike?

Trade policy reversals—particularly on Greenland tariffs—pushed the VIX above 50, matching early-pandemic turbulence.