Trump Era Market Struggles: A Rocky Start Amid Tariff Turmoil

Since the inauguration of President Trump, the stock market has experienced one of its worst starts under any presidency since 1950. According to data analyzed by SunDial Capital Research strategist Jason Goepfert, the S&P 500 (^GSPC) has declined approximately 6.4% in the first 50 trading sessions. This performance ranks among the lowest compared to other presidents. The only worse starts were during Richard Nixon’s (-7.2%) and George W. Bush’s (-13.6%) administrations. Conversely, John F. Kennedy (+9.4%), Barack Obama (+5.7%), and Bill Clinton (+4.2%) had the best initial performances. Historically, rough beginnings like this are ominous signs for future stock performance.

Market analysts warn that poor early returns often foreshadow continued struggles. Six months after a negative start, the median return of the S&P 500 is -1.9%, and even a year later, it tends to be flat. Only four out of ten instances showed more gains than losses over the subsequent year. Tariffs have been a significant factor affecting market sentiment, with the new administration's stance on them unsettling investors. As new tariffs loom, their potential impact remains uncertain.

Historical Market Performance Under New Presidents

Examining historical stock market trends reveals how different presidential administrations have influenced financial markets. President Trump's term began with a notable decline in the S&P 500, placing it among the worst starts since 1950. Comparatively, other administrations saw varying degrees of success or failure within their first 50 trading days. This pattern suggests that market reactions can be heavily swayed by political decisions and economic policies introduced at the onset of a presidency.

Jason Goepfert's analysis highlights the significance of these early market movements. For instance, Richard Nixon and George W. Bush faced considerable downturns early in their terms, which correlated with challenging economic periods later. In contrast, John F. Kennedy, Barack Obama, and Bill Clinton initiated their presidencies with positive market responses, possibly due to favorable policy announcements or broader economic conditions. These precedents indicate that the trajectory set during the initial phase of a presidency may influence long-term market behavior. Furthermore, Goepfert warns that while attributing stock movements solely to politics is risky, the correlation between tariff discussions and market unease appears evident in this case. Whether proposed tariffs will materialize as announced remains speculative, yet their potential impact on stocks and the economy is undeniable.

Tariffs and Their Impact on Economic Stability

The introduction of tariffs by the Trump administration has significantly affected market stability and investor confidence. With the possibility of new tariffs emerging post-market hours, uncertainty persists regarding their structure and effectiveness. Speculation ranges from a universal 20% levy to sector-specific measures, leaving both domestic and international markets anxious. Administration officials suggest immediate implementation but hint at openness to negotiations, complicating predictions.

Existing tariffs, such as the 25% fee on steel and aluminum imports, have already impacted global trade dynamics. Retaliatory actions by countries like China and Canada further exacerbate tensions. China's imposition of tariffs on various US goods, including agricultural products, and Canada's similar measures on billions worth of imports highlight escalating trade disputes. Market experts argue that these tariffs could constrict economic growth and depress stock prices further. BCA Research's Peter Berezin suggests that markets might not fully reflect the true cost of tariffs yet. He notes that while some leading stocks have fallen, others remain stable, suggesting an incomplete pricing of potential risks. This scenario contrasts with expectations of a market anticipating recessionary conditions, underscoring the complexity of current economic forecasts.