The Market’s Historical Performance Under Trump

 

The Market’s Historical Performance Under Trump

In President’s Trump’s first term in 2017, the stock market reached record highs on the back of corporate tax cuts and massive deregulations. However, trade wars, with the most influential impact from China, has created significant volatility in the stock market. Since President Trump’s recent re-election and second term, it is clear that President Trump has plans on doubling down on many of these policies/initiatives. In this blog, we will continue to explore the different market outcomes based on the different sectors. 

Win or Lose? Breaking Down the Scenarios

1. The Bullish Case: A Market Rally for Certain Sectors

With Trump’s implications on policies, this could push key industries to be highly profitable for investments. Some key industries would be the Financial Sector, Defense and Security and Energy and Fossil Fuels. 

For the financial sector, the ease in financial regulations would be advantageous to companies such as JPMorgan Chase, Goldman Sachs, and regional banks, because it allows companies to profit more by having more loans.

As there is an increase in national security expenditures and potential geopolitical tensions, this could elevate stocks like Lockheed Martin, Raytheon, and Northrop Grumman.

With the removal of government controls in oil, gas and coal industries, it could be an expansion opportunity for companies such as ExxonMobil, Chevron, and smaller shale producers. This would then impact investors in this sector to possibly have strong gains. 

If another tax cut occurs, consumer spendings would potentially increase, supporting retail and tech companies with revenue. This would however affect the national deficit, possibly posing risks for the nation.

2. The Bearish Case: Risks of Trade Wars, Deficit Growth, and Market Volatility

Although there are potential benefits from Trump’s policies, these policies may establish potential major risks that could impact investors. 

As Trump imposes additional tariffs on imported goods from China, it could aggravate the countries relationship and turn into a prolonged trade war, affecting companies with global supply chains such as Apple, Tesla and semiconductor manufacturers like NVIDIA and Intel. China’s retaliation to the restrictions would also cause businesses, tech and agriculture industries in the US to suffer

As the US deficit increases with the continued tax reductions and increased spendings, bond markets may react negatively, forcing the Federal Reserve to spike interest rates, increasing the cost of borrowing for businesses and consumers. This would then result in slower economic growth, potentially leading to an economic downturn.

There could also be a risk in the uncertain regulations which are not specific, affecting industries such as healthcare and renewable energy. This could possibly hinder both innovation and investment for companies in these industries, while others benefit from the changes in regulations.



Zooming into the Technological Sector 


Since president trump’s re-election, the technological sector has been blessed with large growth opportunities based on the new administrative implementations by Trump’s team. Tax cuts and deregulation has led investors optimism on a bullish market. This has led to a surge in technological stocks, and especially on high-growth companies such as Nvidia (NVDA), AMD and other semiconductor firms. AI-driven stocks saw record highs as investors flock towards the potential of artificial intelligence and cloud computing, as expectations of reduced scrutiny in business operations and favoured regulatory environments encourage capital inflows 


However, the technological sector has seen a significant plummet after its initial highs, as the negative effects of Trump’s economic policies emerged. The overall investor sentiment has taken a dive as rising interest rates, renewed trade tensions, tariffs and federal’s stance on inflation control resulted in investors not finding tech stocks as attractive as before. The Federal Reserve’s aggressive stance on inflation control led to increased bond yields, and tightened trade exports to countries like China has disrupted supply chains, creating uncertainty for semiconductor companies like NVDA and AMD. 


To mitigate these risks and combat the downsides of President Trump’s new initiatives, many investors chose to diversify their portfolios, with many opting for defensive stock sectors such as utilities and energy. Investors have also taken stands for more stable stocks like InterDigital (IDCC), with different revenue models that have been minimally impacted by the new regulations.



References:

Fineberg, S., Hupfer, S., Steinhart, M., Mazumder, S., & Raman, P. (2025, February 11). 2025 technology industry outlook. Deloitte Center for Technology, Media & Telecommunications. https://www2.deloitte.com/us/en/insights/industry/technology/technology-media-telecom-outlooks/technology-industry-outlook.html 

German, B. (February 15, 2025) Tech and power giants launch new AI consortium, Axios

https://www.axios.com/2025/03/20/epri-open-power-ai-consortium

La Monica, P. R. (2025). Investing in tech sector stocks: A beginner’s guide. Britannica Money. https://www.britannica.com/money/information-technology-stocks 

Lu, W., & Thomasson, L. (2025, February 14). Wall Street’s Top Trends So Far in 2025. Bloomberg. https://www.bloomberg.com/news/newsletters/2025-02-14/wall-street-s-top-trends-so-far-in-2025 

L. Yee, M. Chui, R. Roberts & M. Issle (July 16, 2024). McKinsey technology trends outlook 2024. https://www.mck

Mordor Intelligence(n.d.). Artificial intelligence market - Growth, trends, and forecasts

https://www.mordorintelligence.com/industry-reports/artificial-intelligence-market

U.S. Bank. (2025, March 6) Stock Market Under the Trump Administration | U.S. Bank. https://www.usbank.com/investing/financial-perspectives/market-news/stock-market-under-trump.html 

Pettypiece, S. (2025, March 11). Trump made the stock market a marker of success. now he’s hedging as markets dip. NBCNews.com. https://www.nbcnews.com/politics/trump-administration/trump-made-stock-market-marker-success-now-hedging-markets-dip-rcna195704 

Statista.(n.d.). Artificial intelligence - Worldwide.

https://www.statista.com/outlook/tmo/artificial-intelligence/worldwide

Statista. (n.d.). Compound annual growth rate (CAGR) of the global artificial intelligence (AI) in energy market from 2020 to 2027

https://www.statista.com/statistics/1175623/cagr-of-the-global-artificial-intelligence-energy-market/

Stock market under the Trump administration. (March 12, 2025). US Wealth Management. https://www.usbank.com/investing/financial-perspectives/market-news/stock-market-under-trump.html 

Trump’s Plan to Extend His 2017 Tax Provisions: Updated National and State-by-State Estimates. (January 8, 2025). ITEP. https://itep.org/trump-tax-law-tempoary-provisions-without-salt-cap/

Trump’s Plan to Extend His 2017 Tax Provisions: Updated National and State-by-State Estimates. (January 8, 2025). ITEP. https://itep.org/trump-tax-law-tempoary-provisions-without-salt-cap/ 

U.S. Global Investors(n.d.). How AI is reshaping aerospace & defense investment opportunities

https://www.usfunds.com/resource/how-ai-is-reshaping-aerospace-defense-investment-opportunities


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