Stock Market: How the ‘Trump Bump’ Became the Trump Slump

The Trump Slump: How Tariffs Tanked the Markets

When Donald Trump won the presidential election last November, the markets reacted positively. His deregulatory platform and perceived business acumen translated into strong performances across the board, propelling stocks into the new year. From the election through Jan. 21, when the markets reopened after Inauguration Day, the Dow Jones Industrial Average gained 5.34%, S&P 500 gained 5.9%, and the Nasdaq gained 8.67%. The so-called “Trump bump” was grabbing headlines and appeared to be giving the bull market — which began in late 2022 — staying power.

But that rally proved to be short-lived. After his first 100 days in office, a dramatic shift in market narrative has occurred, and all post-election gains have been reversed. At press time Monday, all three of the major indices were lower than they were at any point between Election Day and the start of the president’s second term. Meanwhile, market volatility has registered a five-year high, GDP forecasts and the value of the U.S. dollar have plummeted, and bearish consumer sentiment has surged alongside concerns about a looming recession.

As investors continue waiting for the president to fulfill his promise of an economic “boom like no other,” here’s how the Trump bump devolved into the Trump slump.

Tariffs tanked the markets

Last week, the Wall Street Journal reported that the S&P 500’s performance since Inauguration Day was the worst for any president up to that point going back to 1928. The Journal also reported that the index was on track for its worst April — a month that historically sees strong stock performances — since 1932. After the S&P 500 hit its all-time high on Feb. 19, the index went on to lose 10.13% through March 13 in anticipation of Trump’s tariff announcement. Then, after a brief gain, those losses accelerated in the beginning of April.

As the markets remain rife with uncertainty, investors may want to start looking down the road, according to Chip Rewey, chief investment officer at Rewey Asset Management, a New Jersey-based registered investment advisor. “I would encourage investors to lengthen their time horizons, which can make this whole tariff battle a little easier,” he says. “Day to day, you are at the whim of a tweet.”

An example of that capriciousness in messaging was on full display when the president formally announced his expanded tariffs on April 2. The market’s reaction to Trump’s self-proclaimed Liberation Day was extreme: From April 3 to April 4, a record-setting two-day sell-off wiped out $6.6 trillion of investor value. Then, on April 9, Trump walked back his plan by announcing a 90-day pause for new tariffs (with the exception of those levied against China), causing a momentary surge in equities.

The reprieves in downward prices seen over the past two months have proven to be insufficient in offsetting the initial losses incurred. According to fintech data platform Unusual Whales, the Dow has fallen by 1,000 points in a single day 11 times in history. Four of them have occurred since Trump’s Liberation Day tariff announcements. By contrast, since he took office in 2025, there has only been one day that the Dow gained 1,000 points.

In March, when addressing how the tariffs could impact stocks, the president said, “I’m not even looking at the market, because long term the United States will be very strong with what is happening here.” However, in the aftermath of the record sell-off, Trump attempted to reassure investors on April 6, saying, “I don’t want anything to go down, but sometimes you have to take medicine to fix something.”

The 90-day tariff pause is further contributing to an already clouded outlook. Investors are now left waiting to see how the markets will respond to the ongoing uncertainties surrounding trade policies and their impact on the economy. the current path could lead to a significant downturn in the economy.”

As the uncertainty around tariffs, inflation, and economic contraction continues to weigh on investor sentiment, it’s likely that the markets will remain muddled in the short term. The ongoing back-and-forth between Trump and the Fed, coupled with the potential for further trade disruptions, is creating a volatile environment that investors are finding difficult to navigate.

For now, the best course of action for investors may be to exercise caution and closely monitor developments in the markets. With bearish sentiment on the rise and Wall Street firms revising their forecasts downward, it’s clear that the road ahead may be rocky. As always, diversification and a long-term perspective remain key strategies for weathering market turbulence.

Only time will tell how the current situation will unfold, but one thing is certain: the coming months are likely to be challenging for investors as they navigate the uncertainty and volatility in the markets.