Under Donald Trump's presidency, the S&P 500 experienced a remarkable 70% annual return, far outpacing gains from most other presidential eras since the late 1890s. Trump has consistently linked this market success to his administration's policies, particularly the tax reforms and innovative programs like Trump Accounts. In late 2017, he signed into law the Tax Cuts and Jobs Act, which cut the top corporate tax rate from 35% to 21%. This change allowed companies to retain more capital, leading to record-breaking stock buybacks and significant investments in cutting-edge technologies, such as artificial intelligence.
Trump Accounts aim to boost stock market participation
On July 6, 2026, the president made headlines by initiating the launch of Trump Accounts, a program designed to promote early investing. In a rare event, Trump rang the opening bells for the New York Stock Exchange and Nasdaq from the Oval Office to mark the introduction. These accounts target children born between January 1, 2025, and December 31, 2028. Each account may start with a $1,000 government contribution. The funds are directed toward stock market investments, aiming to encourage a long-term habit of investing among the next generation of Americans and provide ongoing support to Wall Street.
Trump has long emphasized the importance of starting to invest early to build lasting wealth. At the launch event, he pointed to the recent all-time highs of the Dow and Nasdaq as evidence of the market's potential. By promoting these accounts, the administration seeks to increase the number of investors in the U.S. and extend the bull market's momentum for years to come. The program also aligns with broader efforts to foster economic growth by engaging more people in the stock market.
Trade policies now pose risk to continued gains
Despite his confident market forecasts, Trump's approach to trade policy introduces potential risks to the current upward trend. His widespread implementation of tariffs on imported goods and ongoing tensions with Iran may lead to increased inflation. Tariffs typically raise the prices of goods for consumers, while the threat of war could further strain the economy. These developments may push inflation above the Fed's target of 2%, disrupting economic balance and weakening investor confidence.
High inflation can erode corporate profit margins and reduce consumer purchasing power, potentially triggering market instability. Analysts are already monitoring for signs of an overheating economy, particularly as Trump pushes for continued expansionary policies. If inflation rises too quickly, it could lead the Federal Reserve to take decisive action, such as raising interest rates, which might slow market growth.
Even though Trump remains optimistic, saying the market will "go through the roof," the full picture is more complicated. Long-term historical data from Crestmont Research show that the S&P 500, including dividends, has maintained positive total returns over 20-year periods, even during challenging economic times. Still, the rest of Trump's second term brings new risks, like growing geopolitical tensions and evolving policy decisions, which could alter the current market trajectory.
The critical challenge now is whether Trump's policies will continue to support the bull market or become the reason it slows. With rising inflation concerns and trade disputes on the horizon, the balance between economic expansion and stability is more precarious than ever. Investors are carefully tracking how these factors evolve in the months and years ahead to determine the market's next direction.
Trump has frequently cited stock market performance as a key indicator of his administration's success. His policies have undoubtedly fueled recent market highs, but the same policies could also bring about major headwinds. The combination of tariffs, trade tensions, and potential war scenarios is drawing attention to the possibility of inflation and its effects on financial markets. For now, the market remains strong, but the risks are growing, and the coming months could test both investor confidence and economic stability.