While the stock market showed growth last year, it experienced the weakest performance for a new presidential administration since 2005, largely due to President Trump’s tariffs contributing to economic uncertainty.
From Inauguration Day last year until January 20 this year, the S&P 500 increased by 13.3%. This is the slowest start to a presidential term in two decades, a stark contrast to George W. Bush’s second term. In his first term, President Trump saw a much more robust 24.1% increase in the same timeframe, according to CFRA Research.
Throughout last year, the S&P 500 reached new all-time highs a total of 39 times, which is significantly lower than the 62 times recorded in 2017 during Trump’s first term.
Interestingly, international stocks outpaced the US market for the first time in years, as sudden tariff announcements from the president caused notable market fluctuations.
The White House has not yet responded to inquiries about these developments.
“This past year was weak, and I suspect we’ll see a continuation of that,” stated Ken Mahoney, CEO of Mahoney Asset Management. He noted that with many factors at play at the start of the new year, achieving new highs seems unlikely.
He expressed concerns over new tariffs, ongoing geopolitical tensions, and rising metal prices, which have prompted investors to seek safer assets.
In Trump’s second term, the S&P 500 recorded back-to-back annual gains of over 20% for the first time since the 1990s. So, the expectations for market growth in 2025 were already significant, as CNN highlighted.
Despite the challenges, the stock market rally has been viewed as a positive aspect of the current Trump economy, driven largely by optimism around AI, decreasing interest rates, solid corporate profits, and a relatively stable economy.
Market fluctuations have been closely linked to the unpredictable foreign trade strategies of the Trump administration. After a series of hefty tariffs were announced in April, stocks dropped close to bear market levels. Meanwhile, the White House is anticipating a Supreme Court decision on whether those tariffs were enacted legally, but they claim to have contingency plans ready.
When the president retracted some of his tariff threats, there was a notable recovery in stock prices, a trend that occurred throughout the year.
Last week, President Trump described the stock market’s downturn due to tensions over Greenland and potential tariffs on European allies as “peanuts,” suggesting that the market would rebound significantly.
After he eased threats of tariffs on certain European nations opposing his ideas regarding Greenland, markets experienced an uptick.
The uncertainties concerning Greenland drove the VIX index, which measures market volatility, to its highest levels since the pandemic began, surpassing 50.
Amidst a declining US dollar, investors turned to safe-haven assets like gold and silver, with gold prices rising above $5,000 for the first time.
Regardless, 2025 marked strong stock market growth for the third consecutive year, and there are hopeful projections for the S&P 500 to keep climbing through 2026.
“Volatility can be both beneficial and detrimental,” Mahoney remarked in a recent statement.
He advised that, given the considerable volatility this year, it was crucial to sell hard but in small amounts, suggesting that investors should prepare to buy during economic slumps, particularly leading up to elections.
