With changes to taxes and interest rates, it's a good time to meet with a wealth advisor.
The stock market under President Trump gained more than 36% from the 2024 election through September 2, 2026, as corporate earnings growth supported stock prices.
U.S. consumer spending remains resilient but more selective, while business investment continues to support revenue, profit margins and earnings.
Fluid tariff policy, geopolitical conflict, slower hiring and rising federal debt remain the principal risks to the 2026 stock market outlook.
How is the market doing under President Trump? The S&P 500 generated a total return of 36% from the November 5, 2024, election through September 2, 2026, despite a nearly 20% decline in early 2025. Stocks recovered because consumer and business spending supported company revenue, record profit margins converted that revenue into record earnings, and investors looked beyond recurring policy and geopolitical shocks.
“Investors have overcome concerns about geopolitical conflict and trade announcements and focused on fundamental strength, namely corporate earnings growth,” says Bill Merz, head of capital markets research for U.S. Bank Asset Management Group. The market’s advance has broadened beyond the largest technology-oriented companies. Smaller-company stocks rose more than 60% from their April 2025 lows through September 2, 2026, while gains across most S&P 500 sectors indicate that investors see opportunities across more of the economy. 1
Corporate profits provide the clearest explanation for the stock market’s performance under President Trump. S&P 500 second-quarter revenue rose more than 16% from a year earlier, while earnings increased more than 53%, more than double analysts’ initial forecast for a second consecutive reporting season. 1 Analysts expect third-quarter revenue growth near 12% and earnings growth of 28%, extending the fundamental support for stock prices.
Those results explain why the market recovered from its early-2025 decline without relying primarily on investors paying more for each dollar of profit. Record profit margins allowed companies to convert strong revenue growth into even faster earnings growth. “Sustained earnings growth can support current valuations, but elevated stock prices leave companies less room to disappoint,” says Terry Sandven, chief equity strategist for U.S. Bank Asset Management Group.
Consumer spending remains a major source of company revenue, although July data showed slower monthly momentum. Retail and food-services sales fell 0.6% from June but remained 5.0% above July 2025 levels, while sales from May through July increased 6.3% from the same period a year earlier. Because retail-sales figures do not adjust for inflation, the gains reflect both price increases and changes in the amount consumers purchased. 2
Motor vehicles and parts, online and other non-store retail, and gasoline stations led the July decline, while clothing stores, restaurants and bars reported monthly gains. 2 Households therefore shifted where they spent rather than broadly retreating from consumption. Higher-income households continue to provide a large share of demand, while many middle- and lower-income consumers compare prices more closely and prioritize necessities, producing uneven results across consumer-facing industries and companies.
The labor market has lost momentum without entering a broad layoff cycle. Employers reduced payrolls by 23,000 in July, and downward revisions left average payroll growth near 20,000 per month from May through July, while unemployment remained low at 4.1%. 3 Average hourly wages rose 3.2% from a year earlier, providing income growth but less protection against higher prices than households enjoyed earlier in the expansion.
Low layoffs still support household income and spending. Initial unemployment claims remain contained, and other labor indicators do not show widespread workforce reductions. Slower hiring nevertheless reduces the economy’s cushion because weaker income growth can restrain spending before unemployment rises sharply.
Actual purchases provide a clearer signal than sentiment surveys alone. Households are cautious about inflation and the outlook, but positive annual retail-sales growth proves many have not sharply reduced spending. A sustained rise in layoffs or slower job creation would weaken consumer demand, company revenue and the earnings outlook.
Tax policy has supported household cash flow through two channels. Federal income tax refunds ran approximately $62 billion above 2025 levels through the 2026 filing season, helping some households absorb higher gasoline and energy costs.1 The increase provides a one-time buffer rather than recurring annual growth.
The One Big Beautiful Bill Act, or OBBBA, added provisions with longer-lasting effects. Higher deductions for state and local taxes and the child tax credit, along with new deductions tied to tips, senior income and certain car-loan interest, may support after-tax household income. Estimates point to a net $127 billion consumer benefit, although the effect will vary across households. 4
The estimated benefit extends support for household spending after the temporary increase in tax refunds fades. The provisions cannot fully offset weaker wage income if hiring falls further or layoffs rise, so employment remains the stronger long-term influence on consumer demand. The same law also offers business tax incentives, extending the policy support from household purchases to capital investment.
Business investment supplies the second major source of demand and earnings growth. Capital spending among S&P 500 companies rose approximately 20% from a year earlier as companies invested in property, plants, equipment, technology and other productive assets. 1 Artificial intelligence (AI) represents a fast-growing share of that spending, but the investment cycle extends much further.
Companies are also investing in factories, industrial equipment, power generation, electrical grid capacity, software and supply-chain infrastructure. Reshoring, or moving production closer to the United States, and broader electrification have increased demand for physical capacity. This activity reaches technology, industrial, energy, utility and service companies rather than remaining concentrated among a few large cloud-computing and AI businesses.
The increase in S&P 500 capital spending generates current revenue for equipment makers, construction firms, technology providers and other suppliers. Those projects also add productive capacity that can help companies produce more efficiently. Faster productivity growth can support future profit margins and earnings if demand stays healthy.
The large increase in capital spending reflects several forces, including rapid investment in AI, data centers, power generation and electrical grid capacity. 1 OBBBA provisions also help drive that growth by allowing qualifying companies to recover some investment costs sooner, which lowers the after-tax cost of equipment, technology and other productive assets. Strong demand and tax incentives now support a broader investment cycle across technology, industrial, energy and utility companies.
The same legislation creates a fiscal trade-off. Its household and business provisions support spending, investment and earnings, while the Congressional Budget Office estimates that the law will increase federal debt by $3.4 trillion over the next decade. 4 Federal debt exceeded $40 trillion in August 2026 after years in which federal spending surpassed revenue.
The Treasury finances deficits by selling short-term bills and longer-term notes and bonds to investors. Deep U.S. capital markets continue to attract a broad range of buyers, but heavier issuance can require higher yields if demand fails to keep pace. The average interest rate on marketable Treasuries reached 3.44% on July 31, 2026, compared with 1.42% in January 2022, raising federal interest costs as older debt matures and the Treasury refinances it.
The United States retains substantial borrowing capacity because of its large, diversified economy, deep capital markets, globally important currency and sustained demand for Treasury securities. Those advantages help explain why markets have not treated current debt levels as an immediate crisis, but they do not eliminate the longer-term risk. Investors can watch the 10-year Treasury yield for evidence that fiscal concerns are beginning to raise borrowing costs or reduce the price investors will pay for corporate earnings.
Geopolitical conflict poses a larger market risk when it disrupts essential supplies or transportation. About 20 million barrels of oil per day moved through the Strait of Hormuz in 2024, equal to roughly 20% of global petroleum liquids consumption, and about 20% of global liquefied natural gas trade also used the route. 5Europe and Asia import more of th
“Investors should focus on whether supply restrictions last long enough, and adaptation weakens enough, to slow growth, raise inflation and alter the path of interest rates.”
Tom Hainlin, national investment strategist for U.S. Bank Asset Management Group
Shipping restrictions do not determine oil prices or stock market returns on their own because energy markets adapt. Commercial inventories, strategic reserve releases, added production, alternate suppliers and routes, and lower demand can offset some lost supply. These adjustments have partly absorbed the decline in shipping capacity and limited the market impact so far.
Economic damage increases when disruption persists and the available offsets weaken. “Investors should focus on whether supply restrictions last long enough, and adaptation weakens enough, to slow growth, raise inflation and alter the path of interest rates,” says Tom Hainlin, national investment strategist for U.S. Bank Asset Management Group. That test connects geopolitical events directly to consumer spending, business costs, profit margins and Federal Reserve policy instead of treating every headline as a lasting market signal.
Tariffs, which are taxes on imported goods, remain one of the most fluid policy variables for the stock market under President Trump. They can raise the cost of materials and finished products, alter supply-chain decisions and add pressure to consumer prices. Their economic effect depends on the tariff rate, the products covered and how much of the cost businesses absorb rather than pass on to customers.
The Supreme Court struck down most tariffs imposed in 2025 under emergency-powers authority, and the administration has refunded about $100 billion of the roughly $166 billion collected under those duties. The administration subsequently used other legal authorities, including Section 301 of the Trade Act of 1974, to impose replacement tariffs. The United States recently imposed 50% tariffs on $27.6 billion of Canadian goods effective August 22, and Canada announced matching tariffs on $27.6 billion of U.S. goods effective September 8.
Tariffs create different results across industries. Companies with flexible supply chains or strong pricing power may manage higher costs more easily, while businesses that rely heavily on imported components may face greater pressure. Investors should focus on whether tariff costs remain manageable or grow enough to weaken consumer demand, business investment, profit margins and earnings.
Energy disruptions and tariffs pose a greater risk to stocks when they create sustained inflation rather than a temporary price increase. Higher inflation can keep interest rates elevated, raising borrowing costs for households and businesses while reducing the value investors assign to future corporate earnings. Slower job growth creates a competing concern and gives the Federal Reserve less flexibility if inflation remains above its 2% long-term goal.
The stock market under President Trump has performed well because continued economic growth and corporate earnings have outweighed policy and geopolitical volatility. Consumer spending and business investment have supported revenue, and record margins have converted that revenue into record earnings. The expansion has slowed, but household demand and capital investment remain positive and reduce near-term recession risk.
The outlook would weaken if the data reverse the forces that support the advance. Rising layoffs would threaten household spending, slower capital expenditures would reduce business demand, and falling profit margins would prevent revenue growth from reaching earnings. A prolonged energy disruption, renewed tariff-driven inflation or materially higher Treasury yields could pressure several links at once and leave the Federal Reserve less room to support growth.
Discipline offers investors a more reliable response than short-term prediction. Investors can review whether a portfolio still aligns with long-term goals, time horizon and tolerance for market fluctuations. They may also rebalance when market moves push allocations away from targets and invest extra cash gradually rather than trying to identify a perfect entry point.
Presidential policies can shape taxes, trade, regulation and the economic backdrop, but they do not control market returns. Earnings, interest rates, inflation and investor expectations continue to exert broader influence over time. A thoughtful review with a U.S. Bank Wealth Management professional can help investors separate temporary market noise from developments that truly change the long-term outlook.
Investors often look at the stock market as a report card on a president, but that view is too narrow. Presidential policy can influence returns through taxes, trade, regulation and public messaging. Over time, economic growth, inflation, interest rates, corporate profits and the stage of the business cycle usually matter more than politics alone.
The White House can shape the backdrop, but it does not control stock prices. Investors value stocks based on what they expect companies to earn over time, and those expectations depend much more on profits, growth and competition than on a single policy headline. Presidents appoint the Fed chair but do not have the power to fire Fed officials over policy disagreements. The Fed also sets monetary policy independently, and Congress still must turn many proposals into law.
Markets usually follow a core group of long-term drivers. Interest-rate trends affect borrowing costs and stock prices, inflation affects household buying power and rate expectations, and corporate earnings help determine how much investors are willing to pay for shares. Productivity growth and demographic trends also matter because they shape long-term economic output.
The S&P 500 generated a total return of 81.3% during President Trump’s first term from 2017 to 2021. That ranked fourth for investor returns over a four-year presidential term since 1980. 1 The number is strong, but it still reflects the full economic environment of that period, not White House policy alone.
Corporate earnings growth has been the predominant factor driving stock markets to new all-time highs, although market performance during Trump’s presidency also reflects policy choices. In early 2025, proposed tariffs helped trigger a sharp selloff, with the S&P 500 falling nearly 20% by early April 2025, while investors later responded more positively to tax relief and Federal Reserve rate cuts. 1Together, tariffs, tax policy and interest rates shaped the market more than any single headline.
Politics often drives headlines, but broader economic forces usually do more to shape market outcomes. Investors continue to watch economic growth, inflation and Fed policy because those forces influence company profits, borrowing costs and stock prices across the market. Investors are also weighing whether advances in artificial intelligence can support stronger long-term productivity and growth.
Markets rarely move for just one reason. A policy shift, a war headline, or a major economic report can move prices in the short run, but longer periods reflect the combined effect of growth, inflation, earnings, interest rates and investor expectations. That is why investors usually make better decisions when they focus on the broader economic picture instead of linking every market move to one event.
The stock market under President Trump has produced gains despite sharp swings. Since the November 5, 2024 election, the S&P 500’s total return climbed more than 36% as of September 2, 2026. 1
The stock market under President Trump has stayed resilient because profits and consumer demand have held up. Consumer spending is still growing, earnings expectations remain strong, and tax relief and lower interest rates continue to support the economy. Those supports have helped offset pressure from tariffs, oil-price spikes and geopolitical conflict.
Shifting trade policies and fluctuating tariffs triggered volatility in the early months of President Trump’s second term, though markets have since recovered. In 2025, the S&P 500 generated a total return of 17.9%. Year-to-date through September 2, 2026, the S&P 500 is up 12.9%. During the primary years of former President Biden’s four-year term (2021–2024), the S&P 500 generated a 66.3% total return. Trump’s first term (2017–2020) saw an 81.3% total return. Since 1980, Trump’s first term ranks fourth for investor returns over a four-year presidential term. The top three terms were: Ronald Reagan (1985–1988, 91.8%), Bill Clinton (1993–1996, +88.6%), and Clinton again (1997–2000, +88.6%).1
Investors should focus on discipline, not fast reactions. Review risk tolerance, rebalance if allocations have drifted, address diversification gaps, and consider phased investing if you are holding excess cash. That approach helps keep portfolios aligned with long-term goals even if volatility continues.
A look at historical equity market performance around midterm elections.
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