President Donald Trump‘s policy decisions and commentary drove the five best and worst days of the U.S. stock market during his second term, according to an analysis by Tom Lee‘s asset management firm Fundstrat.
Since his election in 2025, Trump’s decisions on key issues such as tariffs, Iran war, and Federal Reserve chair appointments have been erratic, reflecting his “Art of the Deal” negotiation style. This unpredictability has made his policy agenda and commentary the primary drivers of the market’s performance, as per the report released on Thursday.
Trump’s influence is a departure from the norm, where the S&P 500’s performance is typically driven by macroeconomic factors like corporate earnings, geopolitical events, and monetary policy. While U.S. government policy can be a factor, it’s unusual for it to be the sole driver.
The President’s impact has been so pronounced that without the five strongest market days tied to his decisions, the S&P 500 would be down 2.7% since he took office in 2025, rather than up 19%, the report stated.
Source: Fundstrat Direct
This is a stark contrast to other presidencies, where the stock market remained in the green even when the five best days were removed, except during former President George W. Bush's 2001 and 2005 terms, when it remained negative regardless, according to Fundstrat. With about 2.5 years still left in Trump's term, markets still have time to change direction.
The five biggest up days in Trump's second term (by magnitude) are:
(1) A 9.5% surge on April 9, 2025, after Trump paused tariffs.
(2) A 3.3% rally on May 12, 2025, following a 90-day tariff truce between the U.S. and China.
(3) A 2.9% gain on March 31, 2026, after Trump signaled willingness to end the Iran war.
(4) A 2.5% rise on April 22, 2025, after he said he wouldn't fire Jerome Powell and expressed hope for a China deal.
(5) A 2.5% increase on April 8, 2026, following a U.S.–Iran ceasefire.
The five steepest market declines during Trump's second presidency (ranked by magnitude) are:
(1) A 6.0% drop on April 4, 2025, following China's retaliatory tariffs on the U.S.
(2) A 4.8% fall on April 3, 2025, after Trump's "Liberation Day" announcement
(3) A 3.5% decline on April 10, 2025, after tariffs on China were raised to 145%
(4) A 2.7% slide on Oct. 10, 2025, after renewed threats of higher China tariffs
(5) A 2.7% drop on March 10, 2025, following broader tariff threats
Markets Swing On Trump's Posts
In May 2025, Bill Eigen, a portfolio manager at JPMorgan Asset Management, had already noted the significant reactivity of the markets to Trump’s social media posts. Eigen said markets are being driven less by economic data and more by volatility, warning that a single Truth Social post could swing prices by 5% in either direction.
By August, Trump’s posts on Truth Social were causing significant stock swings for companies like Tesla Inc. (NASDAQ:TSLA), Boeing Co. (NYSE:BA), American Eagle Outfitters Inc (NYSE:AEO) and Pfizer Inc. (NYSE:PFE).
Sen. Adam Schiff (D-Calif.) and other Democrats had said that Trump may have used privileged information to sway markets. Lawmakers led by Rep. Maxine Waters had also asked the U.S. Securities and Exchange Commission (SEC), in April 2025, to investigate.
‘TACO Trade’ Reshapes Market Playbook
Over the past year, the "TACO trade", an acronym for “Trump always chickens out,” has shifted from a tongue-in-cheek term coined by a Financial Times columnist into a significant force shaping market behavior.
The "TACO" concept isn't new, though. During Trump's first term, investors followed the "Trump put," expecting him to step in to calm markets during periods of sharp volatility.
Kim Caughey Forrest, founder and chief investment officer at Bokeh Capital Partners, told MarketWatch earlier this month that "TACO trade" suggests bearish investors often overestimate downside risks.
Under Trump's rapidly shifting policy landscape, investors may need to abandon old playbooks as market rules change, as Fundstrat Head of Research Tom Lee previously stated, “Don't fight the White House.”
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by a Benzinga editor.
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