Trump's Second Term Brings Sharpest Market Decline Since 2001It's gone nearly three months or so... (Duh..? WTF.. less than 3 months, really? 🙀) since Donald Trump entered The White House (again).
Those times everyone was on a rush, chatting endless "Blah-Blah-Blah", "I-crypto-czar", "crypto-capital-of-the-world", "we-robot", "mambo-jumbo", "super-duper", AI, VR and so on super hyped bullsh#t.
What's happened next? We all know.. mostly all US stocks and crypto markets turned to 'a Bearish Mode', or to at least to 'a Correction' (that is still actual at this time).
Here's a short educational breakdown for Nasdaq Composite index NASDAQ:IXIC what we think about all of that, at our beloved 💖 @PandorraResearch Team.
Trump's Second Term Brings Sharpest Market Decline Since 2001: Analyzing the recent 15% Stock Market Plunge
President Donald Trump's second term has coincided with a dramatic stock market downturn, with the S&P 500 losing approximately 15% of its value since his January 2025 inauguration. This represents the worst start to a presidential term since George W. Bush in 2001 during the dot-com crash. The decline has erased more than $3 trillion in market value, driven primarily by concerns over trade policies, particularly the implementation of new tariffs.
Market analysts point to growing fears of potential stagflation—a toxic combination of slow economic growth and high inflation—as investor confidence continues to deteriorate despite pre-election expectations of business-friendly policies.
Unprecedented Market Decline Under the New Administration
Historical Context of Presidential Market Performance
The current market downturn stands out in stark relief when compared to previous presidential transitions. The S&P 500 has fallen nearly 10% in the first 10 weeks since Trump's inauguration on January 20, 2025, marking the worst start under a new president since George W. Bush in 2001. This decline is significantly worse than the start of the prior five administrations, with Bush's roughly 18% drop during the dot-com crash being the only steeper decline in recent presidential history. Looking further back, only Richard Nixon experienced a comparable early-term market decline with a 7.2% drop, highlighting the severity of the current situation.
When examining presidential market performance metrics, Trump's second term has already distinguished itself negatively. During the first 50 days, the S&P 500 declined by 6.4%, positioning it among the poorest market starts since 1950. By contrast, the best 50-day starts were achieved by John F. Kennedy (up 9.4%), Barack Obama (up 5.7%), and Bill Clinton (up 4.2%), demonstrating how unusual the current market trajectory is in historical context.
Magnitude of the Current Decline
The scale of market value destruction has been substantial. More than $3 trillion has been erased from the S&P 500's value over approximately 52 trading sessions since Trump's inauguration. By early April 2025, the decline had accelerated to approximately 15% from Inauguration Day, pushing the market dangerously close to bear territory. Market analysts note that if the S&P 500 reaches a 20% decline from its recent peak, it would mark the earliest instance of a bear market during a new administration based on S&P 500 history since 1957.
The tech-heavy Nasdaq Composite has suffered even more severely, with declines exceeding 11% by mid-March. This demonstrates the particular vulnerability of growth stocks that had previously led market gains, now facing the most significant corrections.
Key Factors Driving the Market Downturn
Trade Policy Uncertainty and Tariff Concerns
Trade policy, particularly the implementation and threat of tariffs, has emerged as the primary catalyst for market turmoil. The unpredictable nature of these policies has created significant uncertainty for businesses, investors, and consumers alike. Trump's "on-again, off-again approach to tariffs" has effectively extinguished the optimism that initially buoyed markets following his election victory in November 2024.
The market decline accelerated dramatically after what was termed the "Liberation Day" event, during which Trump announced plans for unprecedented tariff escalation. Two-thirds of the S&P 500's 15% decline occurred after this announcement, prompting Ed Yardeni of Yardeni Research to observe that "Liberation Day has been succeeded by Annihilation Days in the stock market".
Fear of Stagflation and Economic Instability
Many economists have warned that the new tariffs could reaccelerate inflation at a time when economic growth may be slowing, creating conditions for stagflation. This combination is particularly concerning for investors, as it creates a challenging environment for corporate profitability and economic prosperity. The risk that tariffs could trigger this economic condition has effectively neutralized investor optimism regarding other aspects of Trump's agenda, including potential regulatory reforms and tax reductions.
Shift in Market Sentiment
The market has undergone a fundamental transformation in sentiment from the period immediately following Trump's election victory to the current environment. Initially, investors had bid stocks up to record highs, anticipating benefits from tax cuts, deregulation, and business-friendly policies. However, this optimism has been replaced by growing concern about economic direction.
As one market strategist noted, "We have witnessed a significant shift in sentiment. A lot of strategies that previously worked are now failing". The S&P 500 has relinquished all gains made since Trump's November 2024 election victory, representing a striking reversal in market confidence.
Potential Long-Term Implications
Historical Patterns and Future Outlook
Historical analysis suggests that poor market starts during presidential transitions often foreshadow continued challenges. According to SunDial Capital Research strategist Jason Goepfert, rough starts represent a "bad omen" for stocks based on past performance patterns. His analysis indicates that markets typically show a median return of -1.9% six months after such a start, and after a year, they generally remain flat. Among similar historical instances, only four out of ten cases resulted in more gains than losses over the following year.
Administration's Response to Market Decline
Unlike during his first term, when Trump regularly referenced strong stock market performance as evidence of his administration's success, his second-term approach appears markedly different. Some market analysts have noted that "The Trump administration appears to be more accepting of the market's decline, potentially even welcoming a recession to achieve their broader objectives". This shift in attitude has further unsettled investors who previously expected the administration to prioritize market stability.
Technical challenge
The tech-heavy Nasdaq Composite index has recently soared 12% for its best day since January 2001.
But did you know what happened next in 2001? The major upside trend as well as 5-years SMA were shortly broken and market printed extra 40 percent Bearish decline.
Similar with what's happening in 2025..!? Exactly!
Conclusion
Trump's second presidential term has coincided with one of the worst stock market starts in modern American history, comparable only to George W. Bush's entry during the dot-com crash of 2001.
The approximately 15% market decline since inauguration represents a loss of trillions in market value and a complete reversal of the optimism that followed his election. Trade policy uncertainty, particularly regarding tariffs, has emerged as the primary driver of market instability, creating fears of potential stagflation and undermining business confidence.
As historical patterns suggest that poor starts often lead to continued underperformance, investors remain concerned about the market's trajectory through the remainder of 2025 and beyond.
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Best 'a bad omen' wishes,
Your Beloved @PandorraResearch Team 😎
