The US stock market has experienced significant volatility during the first 100 days of President Donald Trump’s second term. The S&P 500, a key benchmark index, has recorded its third-worst performance in US presidential history during this period, surpassed only by the terms of Gerald Ford and Richard Nixon. Initially, the market surged following Trump’s reelection in November, driven by expectations of a pro-business boom.
However, the introduction of tariffs and the administration’s shifting trade policies led to historic levels of uncertainty and market fluctuations. Trump’s inauguration coincided with Martin Luther King, Jr. Day, during which the US stock market was closed.
On the first day of trading during his presidency, the market rallied as Trump announced a 25% tariff on Mexico and Canada starting February 1. The markets were particularly sensitive to Trump’s tariff announcements. Stocks slid after he signed the first executive order imposing tariffs of 10% on China and 25% on Mexico and Canada.
Investors became nervous about the potential impact of tariffs on economic growth. With higher tariffs on Canada, Mexico, and China put into effect, the market fluctuated, as investors were unsure how to respond to these new policies.
Trump tariffs spook stock markets
The S&P 500 eventually slid, erasing gains since Trump’s reelection, and the “Trump bump” evaporated as the index closed at its lowest level since November. Trump’s tariffs threatened to upend the global economy, impacting businesses that rely on international supply chains and raising costs for consumers. High tariffs can contribute to weak consumer sentiment and higher inflation, both of which can negatively impact the economy.
In an interview with Fox News, Trump refused to rule out a recession, describing the current phase as a “period of transition.” Following these comments, the S&P 500 and the Dow recorded their steepest one-day losses for the year to date, with the Nasdaq seeing its biggest single-day decline since 2022. Treasury Secretary Scott Bessent attempted to calm the markets by stating on CNBC that he was not concerned about “a little bit of volatility over three weeks.” Despite this, Trump’s trade policies continued to cause jitters, resulting in the worst quarterly performance for the S&P 500 since 2022. As Trump’s first 100 days came to an end, it was clear that his administration’s trade policies had introduced a significant level of unpredictability to the stock market, with lasting implications for investor confidence and economic stability.
The impact of tariffs on the economy and markets remains a critical concern for investors. According to Sam Stovall, chief investment strategist at CFRA Research, many on Wall Street anticipated that tariffs might be more rhetorical than substantive. “In fact, it ended up being reality,” Stovall noted, adding that the long-term ramifications of these policies are still to be fully realized.
The stock market’s performance under Biden’s administration is still unfolding, with investors closely monitoring economic policies and their implications. The continued focus on tariffs, trade policies, and other economic factors will be crucial in shaping market outcomes in the coming years.