President Donald Trump Has Achieved a Stock Market Milestone Unmatched by Any President in the Past 75 Years

For over one hundred years, the stock market has been a primary arena for generating wealth. While various asset classes have produced positive nominal gains, equities have consistently provided the highest average yearly returns over extended periods.

However, achieving financial growth on Wall Street comes with its challenges. Market corrections, bear markets, and occasional crashes are the costs investors must bear for long-term growth. This year, we saw this volatility firsthand as the benchmark S&P 500 ( ^GSPC -0.32%) experienced its fifth-largest two-day percentage drop since 1950, joined by the iconic Dow Jones Industrial Average ( ^DJI -0.48%) and the growth-driven Nasdaq Composite ( ^IXIC -0.03%), both of which declined by double-digit percentages.

The main driver behind this increased turbulence was President Donald Trump. While his policies have sometimes unsettled Wall Street, Trump also presided over a unique moment in stock market history by achieving something no other president has managed in the last 75 years.

President Trump achieved what six previous presidents could not

As you may have observed, the S&P 500, Dow Jones, and Nasdaq Composite all reached new record closing levels in recent weeks.

Speculation that the Federal Reserve could resume cutting interest rates at its upcoming meeting has further boosted investor optimism. Lower rates typically lead to more borrowing, which can spur hiring, foster innovation, and increase merger and acquisition activity among companies.

On top of this, the excitement around artificial intelligence (AI) has contributed to broader market gains. Some estimates suggest that AI could add $15.7 trillion to the world’s gross domestic product by 2030, making it the most transformative technology since the internet’s rise in the 1990s. Major investments in AI data center infrastructure by key players in the “Magnificent Seven” have further fueled investor enthusiasm.

There is also hope that the uncertainty caused by Trump’s tariff and trade policies will soon be largely behind us. This may have been the key factor behind Trump’s historic milestone in August.

Stocks have never been higher in August under a second term president in a post-election year.

6 for 6 lower. pic.twitter.com/Ej4CFwftNe

-- Ryan Detrick, CMT (@RyanDetrick) August 1, 2025

Based on statistics compiled by Carson Group’s Chief Market Strategist Ryan Detrick, all six prior second-term presidents since 1950 saw the S&P 500 drop in August of their post-election year. Yet in August, as the S&P 500 rose 1.9%, Trump broke this pattern.

While this notable moment in stock market history doesn’t guarantee future results, it stands out given how well the S&P 500, Dow Jones, and Nasdaq Composite performed during Trump’s initial term.

It's not time to celebrate just yet...

Optimists may be pleased with Wall Street’s recent performance over the last five months, but it’s too early to start celebrating. Although some uncertainties have eased, two major obstacles could challenge this bull market’s progress.

Perhaps the most pressing challenge is the historically high valuation of the stock market. The AI boom has led to higher earnings multiples and increased growth projections for most of the Magnificent Seven, but it’s hard to ignore that stock prices are elevated.

The most accurate way to compare valuations is the S&P 500’s Shiller price-to-earnings (P/E) ratio, also referred to as the cyclically adjusted P/E (CAPE) ratio.

Looking back 154 years, the average Shiller P/E ratio has been 17.28. Recently, this figure surpassed 39, making it the third-most expensive extended bull market on record. In previous cases where the Shiller P/E stayed above 30 for at least two consecutive months, the S&P 500, Dow Jones, and/or Nasdaq Composite ultimately experienced declines of 20% or more.

S&P 500 Shiller CAPE Ratio data via YCharts. CAPE ratio stands for cyclically adjusted price-to-earnings ratio.

Another concern is the uncertain impact of Donald Trump’s tariff policies on the U.S. economy. Aside from ongoing legal debates over the legitimacy of many tariffs, these policies risk sparking higher inflation in the U.S.

A December 2024 study published by four economists at the New York Federal Reserve on Liberty Street Economics (Do Import Tariffs Protect U.S. Firms?) highlighted Trump’s China tariffs from 2018-2019 as a cautionary example.

They noted that during Trump’s first term, his China trade policy made little distinction between output and input tariffs. Output tariffs are imposed on imported finished goods, while input tariffs apply to raw materials or components used in domestic manufacturing. Input tariffs can raise the cost of domestic production and fuel inflation.

Though some inflation is normal, persistent price increases combined with a weakening labor market, as seen in recent months, could lead the Federal Reserve to face its most difficult scenario: stagflation.

Long-term, stocks have been a winning investment statistically

Market uncertainty and fluctuations are inevitable when investing in Wall Street. Even though there’s no immediate solution for Trump’s tariff unpredictability or an overvalued market, history clearly favors investors who take a long-term approach.

For instance, Crestmont Research annually updates a dataset tracking rolling 20-year total returns (including dividends) of the S&P 500, dating back to the early 1900s. While the S&P 500 was officially formed in 1923, researchers reconstructed its performance using its components from other indices between 1900 and 1923. This resulted in 106 rolling 20-year periods to analyze (1900-1919, 1901-1920, and so forth, through 2005-2024).

Crestmont’s findings revealed that all 106 rolling 20-year periods produced positive annualized returns. In other words, if you had hypothetically invested in an S&P 500 index fund at any time from 1900 through 2005 and held it for two decades, you would have ended up with a positive total return every single time, including dividends. It didn’t matter if your investment period included recessions, depressions, wars, tariffs, stagflation, hyperinflation, pandemics, or any other crisis—the S&P 500 always ended up higher after 20 years.

Bespoke Investment Group also pointed out the imbalance in market cycles in a post on X (formerly Twitter) in June 2023.

It's official. A new bull market is confirmed.

The S&P 500 is now up 20% from its 10/12/22 closing low. The prior bear market saw the index fall 25.4% over 282 days.

Read more at https://t.co/H4p1RcpfIn . pic.twitter.com/tnRz1wdonp

-- Bespoke (@bespokeinvest) June 8, 2023

Bespoke’s analysts compared the duration of every bull and bear market for the S&P 500 back to the beginning of the Great Depression in September 1929, identifying 27 distinct cycles.

On average, S&P 500 bear markets lasted 286 calendar days, or just over nine months. By contrast, bull markets persisted about 3.5 times longer, with an average length of 1,011 days across nearly 94 years.

No matter what the coming weeks, months, or years may bring, history shows that both the U.S. economy and its stock market have a strong tendency to expand over the long run.