Trump's Comment Sends Shockwaves Through Markets

Trump's Unprecedented Influence on the Stock Market

The past 15 months have seen the stock market's fortunes largely tied to the whims of President Donald Trump. Since taking office in January, Trump's comments to reporters and social media posts have been the primary driver behind the five best and worst days in the S&P 500 Index, according to an analysis from Fundstrat Research.

This level of control is unmatched by any modern American leader, surpassing even President Ronald Reagan's 12 administrations since 1981. Fundstrat Research's analysis highlights the unprecedented impact of Trump's words on the market.

The war in Iran has provided a perfect backdrop to demonstrate Trump's influence on US stocks. The S&P 500 experienced its fastest V-shaped drop and recovery since 2020, plummeting 9% from a Jan. 27 peak to the cusp of a technical correction on March 30, before rallying back to all-time highs over the course of 11 trading days.

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The S&P 500's performance is a clear reflection of Trump's wavering positions on the war. Commodity prices have also seen significant swings, with oil market volatility rising to levels last seen at the start of the Covid-19 pandemic.

Market analysts have described Trump's influence on stocks as the "arsonist and firefighter," with his words sparking both volatility and subsequent rebounds. This whiplash is reminiscent of last year's tariff-driven rout and subsequent rebound, which were both tied to abrupt policy jolts from the president.

Investors have become accustomed to expecting reversals in policy and rhetoric from day to day, with many waiting for the "tweet that says, actually, we're good." The president's influence on stocks is not entirely new, but the market's reaction to his social media posts and public speaking engagements is unprecedented.

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Veteran market strategist Ed Yardeni of Yardeni Research notes that Trump speaks every single day, and every single day he says something that seems to have an impact on the market. The White House has even begun using its social media channels to address market moves, posting animated graphics to tout S&P 500 records or telling Wall Street not to be "panicans" when Trump's words or policies spark fears.

Fundstrat's Hardika Singh comments that this level of control is "completely unprecedented" and has "never happened before." Among the S&P 500's best days during Trump's current term are the 9.5% rally on April 9, 2025, when he paused his tariffs, and the 3.3% jump on May 12, 2025, when the US and China agreed to a 90-day trade truce.

However, some Wall Street pros argue that the symbiosis between what the president says and what the market does is purely anecdotal and a function of the frequency of the president's communication. A look at volatility measurements contradicts the idea that the market has been more turbulent under Trump than during past administrations.

Barclays' Alexander Altmann notes that the average value of the Cboe Volatility Index, or VIX, across the entire term of each president since the inception of the gauge in 1990 is 19.3, precisely in line with Trump's second term and with President Joe Biden's term.

The rise of passive investing has made the market more reactive to news in general, whether it's a president's comments or an unexpected earnings report. By his estimate, markets are approximately four to five times more reactive than they've been historically.