You’ve probably seen the headlines. One day the Dow is screaming toward 40,000, and the next, everyone is panic-selling because of a stray Truth Social post about "reciprocal tariffs." Honestly, trying to track the stock market since Trump took the oath for the second time is like trying to read a map during an earthquake. It’s moving. Fast.
The reality? 2025 was a year of whiplash. We started with a "melt-up" as the "One Big Beautiful Bill Act" promised to slash the corporate tax rate from 21% down toward 15% for domestic manufacturers. Investors were drunk on the idea of 2017-style deregulation all over again. But then, April 2 hit.
The administration dropped a bombshell of "reciprocal tariffs" on dozens of countries. The S&P 500 didn't just dip; it lurched lower, shedding nearly 20% in seven weeks. It was "Liberation Day" for some, but for the average 401(k), it felt like a controlled demolition.
The "Trump Trade" 2.0: Winners and the Total Washouts
If you were holding Big Tech or defense contractors, you probably had a decent year. If you were in green energy? Ouch. Basically, the market has split into two different worlds.
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On one side, you have the "Elon and Peter" trade. Palantir (PLTR) has been the absolute darling of the stock market since Trump returned, soaring over 113% at one point in 2025. Why? Because as the Department of Government Efficiency (DOGE) started gutting federal agencies, they needed software to automate what the humans used to do. Palantir’s AI-driven platform became the "meritocracy engine" for a leaner government.
Then there's the energy sector. We were told to "drill, baby, drill," and while regulatory barriers fell, the actual stock prices for upstream oil and gas have been... kinda messy. Tariffs sparked fears of a global slowdown, which actually pushed oil prices down. It’s the ultimate irony: the most pro-oil administration in history saw many oil stocks struggle because of trade war collateral damage.
The Great Tariff Rollercoaster of 2025
- January-March: The Euphoria Phase. S&P 500 hits 6,144. Everyone is buying the "deregulation" story.
- April 2: The "Reciprocal Tariff" shock. $7 trillion in market value vanishes in 48 hours.
- May-July: The "Truce Recovery." Tariffs are paused for negotiations. The market rebounds 40% from the April lows.
- Late 2025: Tax cuts (The One Big Beautiful Bill Act) finally kick in, lifting corporate earnings expectations by $100 billion.
Why 2026 is Looking Like the "Instability Year"
We’ve officially entered 2026, and the vibe has shifted from "exciting" to "unstable." Liz Ann Sonders and the team at Schwab have been vocal about this—instability is different from uncertainty. Uncertainty means we don't know what will happen. Instability means we know exactly what's happening, but the foundations are shaking.
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Inflation is the ghost that won't leave the room. Even though the Fed cut rates three times in late 2025, core PCE is still stuck near 2.5% to 3%. Tariffs have raised retail prices by about five percentage points above the old trend. You see it at the grocery store, and the market sees it in the 10-year Treasury yield, which has been flirting with 4.5% again.
But here is the weird part: people are still spending. The Yale Budget Lab points out that while the effective tariff rate is hitting 14.4%, consumer after-tax incomes are expected to rise by $127 billion this year thanks to the tax extensions. It's a tug-of-war between higher prices and more cash in the pocket.
What Nobody is Talking About: The "Trump Accounts"
Treasury Secretary Scott Bessent recently teased something that could fundamentally change the stock market since Trump took office: the "Trump Accounts."
The goal is to get the 38% of Americans who don't own stocks into the market. It's an "ownership economy" play. If this actually scales, we could see a massive influx of retail liquidity that props up valuations even when the fundamentals look shaky. Right now, the S&P 500 is trading at 22.5x earnings. That’s getting dangerously close to dot-com bubble territory (24.5x). Without new buyers, the air up here is getting thin.
Crypto: The New Digital Gold?
You can't talk about this market without mentioning Bitcoin. Under the second Trump term, crypto has been treated less like a "scam" and more like a strategic national asset. Bitcoin crossed $120,000 recently. The "crypto renaissance" is real, and with the iShares Bitcoin Trust (IBIT) up double digits since the inauguration, it’s becoming a staple for even conservative portfolios.
Sector Scorecard: Who’s Actually Making Money?
- Communication Services (+33%): Think Alphabet and Meta. They’ve dodged the worst of the antitrust heat that was expected.
- Financials (+15%): Banks love deregulation and a steeper yield curve.
- Consumer Staples (+3.9%): Boring but safe. Philip Morris (PM) has been a "flight to safety" winner because Zyn pouches are apparently recession-proof.
- Real Estate (-10.5%): The big loser. High rates and the "death of the office" are still crushing REITs.
How to Handle Your Portfolio Right Now
So, what do you actually do with this information? If you're waiting for the market to "return to normal," you're going to be waiting a long time. This is the new normal.
First, watch the 10-year Treasury yield like a hawk. If it stays above 4.5%, growth stocks—the ones that rely on cheap debt—are going to feel the squeeze. Second, don't ignore international stocks. Everyone is obsessed with the US, but international markets actually outperformed the S&P 500 in 2025 because their valuations were so much cheaper.
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Most importantly, keep an eye on the 2026 midterms. Market volatility almost always spikes in the months leading up to November.
Your Move:
- Audit your exposure to China-reliant companies. If 50% of a company's supply chain is in a "tariff zone," they are a ticking time bomb.
- Look at "Value" over "Growth." The S&P 500 Value Index outperformed the broader market in late 2025 for a reason.
- Check your cash levels. With high-yield savings accounts still offering decent returns, you don't need to be 100% in stocks to beat inflation.
The stock market since Trump became the 47th president has proven one thing: it’s resilient, but it’s also reactive. Don't trade on the tweets—trade on the tax code. That's where the real money is being made.