Breaking Down the Stock Market Under Trump vs. Biden

Stock market returns under Trump and Biden have reflected sharply different economic backdrops. Trump’s first term benefited from a long expansion and strong pre-pandemic bull market, while Biden took office amid pandemic recovery, high inflation, rising interest rates and geopolitical shocks. Major indexes reached record highs under both administrations, but cumulative gains were stronger during Trump’s first term, helped by the relative stability that preceded COVID-19.

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With Trump back in office, the comparison is more complicated. His second term has been shaped by tariffs, tax policy and geopolitical tensions, including the war with Iran, which has contributed to inflation and market volatility. At the same time, continued investment in artificial intelligence has helped support technology stocks and broader market gains.

Stock Market: Trump vs. Biden

Stock market performance during any presidency reflects a wide range of influences beyond government policy. Interest rates, global economic conditions, geopolitical developments and shifts in investor sentiment all contribute to how markets perform over time.

Even with those broader forces at work, comparing major indexes such as the S&P 500, Dow Jones Industrial Average (DJIA) and Nasdaq during the Trump and Biden administrations reveals meaningful differences in market direction, investor positioning and sector leadership across each period.

S&P 500 Performance

During Trump’s first term in office, the S&P 500 increased from approximately 2,271 on Jan. 20, 2017, to about 3,798 by Jan. 20, 2021, marking a gain of around 67% over four years. ¹ This period was characterized by corporate tax cuts and deregulation, which supported equity markets. The index experienced volatility during the onset of the COVID-19 pandemic, but recovered swiftly.​

During the Biden years, the market benefited from economic reopening and stimulus measures, but faced challenges from inflation and interest rate hikes. Despite these headwinds, the index reached new highs during this period and gained nearly 56% cumulatively.

Dow Jones Industrial Average (DJIA) Performance

The DJIA under Trump advanced from around 19,827 at the start of his term to approximately 31,188 by Jan. 20, 2021, yielding a gain of about 57%. This growth was supported by policies favoring industrial and financial sectors. The index experienced a sharp decline during the early stages of the pandemic but rebounded by the end of his term.​

During Biden’s tenure, the DJIA increased from approximately 31,188 to about 43,488 by Jan. 17, 2025, marking a gain of roughly 39.5%. ² The index benefited from continued economic recovery and corporate earnings growth, though it faced periods of volatility due to monetary policy shifts and global uncertainties.​

Nasdaq Composite Performance

Under Trump, the Nasdaq Composite surged from about 5,555 to approximately 13,197, more than doubling over four years. This growth was driven by strong performance in the technology sector, supported by low interest rates and robust earnings.​

During Biden’s term, the Nasdaq Composite rose from around 13,197 to approximately 19,630 by Jan. 17, 2025, achieving a gain of about 48.7%. ³ The index reached new highs, propelled by continued strength in technology and growth stocks, despite facing challenges from rising interest rates and inflation concerns.​

Overall, while all three major indexes experienced gains under both administrations, the magnitude and drivers of these gains varied, reflecting differing economic conditions and policy environments.​

For a quick recap, the table below summarizes stock market performance under Trump’s first term vs. Biden’s only term:

Stock Market During Trump’s Second Term

President Donald Trump’s second term has introduced significant volatility to financial markets, largely attributed to expansive tariff policies and unpredictable economic strategies, as well as the war with Iran. The announcement of broad tariffs on imports led to immediate and substantial declines in major stock indices, with the S&P 500 experiencing a notable drop shortly after the policy’s implementation.

The administration’s approach to trade has been characterized by abrupt policy shifts and a lack of clear economic direction, contributing to investor uncertainty. Analysts have observed that the absence of a coherent economic roadmap has eroded confidence among institutional investors, leading to heightened market volatility. ​

Meanwhile, AI-related investment has continued to support technology stocks, particularly companies involved in semiconductor manufacturing, data centers and other infrastructure. This has created a market in which certain technology companies have generated substantial gains even as other sectors face pressure from higher energy costs and economic uncertainty.

Impact of War With Iran

The war with Iran has been a source of market volatility since fighting began in late February 2026. Concerns about disruptions to energy supplies, particularly through the Strait of Hormuz, have pushed oil prices higher and raised concerns about inflation and economic growth.

The S&P 500 closed at 6,878.88 on February 27, the last trading day before the war began. By March 30, the index had fallen to 6,343.72, a decline of approximately 7.8%. However, stocks subsequently rebounded, with the S&P 500 reaching 7,230.12 on May 1.

Although the market recovered from its initial losses, the conflict continued to create uncertainty. Renewed attacks on commercial shipping in the Strait of Hormuz intensified concerns about energy supplies in October. According to Reuters, October saw the highest number of attacks on commercial vessels in and around the strait since the war began.

Higher oil prices have also contributed to renewed stock market volatility. On October 23, Brent crude rose above $116 per barrel, while the S&P 500 declined 0.5%. Sustained increases in energy costs can put upward pressure on inflation, potentially affecting corporate profits, consumer spending and expectations for interest rates.

Despite these fluctuations, major U.S. stock indexes remained higher than when Trump returned to office. As of October 23, 2026, the S&P 500 had gained approximately 27.1%, ⁴ while the Dow Jones Industrial Average had risen about 20.1%, measured from their January 17, 2025, closing levels, the last trading session before Trump’s inauguration. ⁵

Impact of Artificial Intelligence

Artificial intelligence has also been a significant driver of stock market returns during Trump’s second term, continuing a trend that began before he returned to office. Investor enthusiasm for AI infrastructure, including advanced semiconductors, data centers and memory chips, has helped support technology stocks despite broader economic uncertainty.

According to S&P Dow Jones Indices, the S&P 500 gained 15% in the second quarter of 2026, its strongest quarterly performance since 2020, with AI-related enthusiasm helping fuel the rally. The gains have extended beyond the largest technology companies. S&P Dow Jones Indices identified Sandisk, Micron Technology and Intel as the S&P 500’s three top-performing stocks through June 30, 2026, reflecting growing investor interest in companies supplying AI infrastructure. ⁶

However, the concentration of AI-related companies in major indexes also creates risks. S&P Global research published in August 2026 warned that disappointment in the anticipated returns from AI investment could trigger declines that extend beyond individual technology stocks. ⁷

Investor Sentiment and Sector Rotation Trends

Sector rotation describes the movement of investor capital between different parts of the economy in response to changing expectations about growth, inflation, interest rates and policy. During periods of economic expansion, investors often favor cyclical sectors such as technology, financials and industrials, which tend to benefit from rising business activity.

In contrast, during periods of uncertainty or slowing growth, capital frequently shifts toward defensive sectors like healthcare, utilities and consumer staples, which are generally viewed as more stable. These allocation shifts offer insight into how markets interpret current conditions and anticipate future economic trends.

Trump’s First Term

During Trump’s first term, investor sentiment reflected expectations of business-friendly policies, including corporate tax rate reductions and deregulation. These measures supported optimism in cyclical sectors such as industrials, financials and energy. At the same time, relatively low interest rates and continued innovation helped sustain strong performance in technology stocks, which played a central role in driving overall market sentiment.

The Biden Years

Under Biden, investor sentiment initially improved amid expectations surrounding infrastructure spending and clean energy investment. However, as inflation accelerated and interest rates rose, market confidence became more measured. Investors increasingly reallocated capital toward defensive sectors such as healthcare, utilities and consumer staples, which are often considered better positioned to withstand economic volatility and tighter monetary conditions.

Trump’s Second Term

In Trump’s second term, the war with Iran has become one of the most immediate influences on investor sentiment and sector performance. Rising oil prices and concerns about possible disruptions to Middle East energy flows have increased pressure on transportation, manufacturing, travel and consumer-focused sectors, where higher fuel and input costs can weigh on profit margins. Energy stocks, by contrast, may benefit from higher oil prices, contributing to a more uneven market environment across sectors.

Economists at Goldman Sachs ⁸ and the International Monetary Fund ⁹ have warned that prolonged disruptions to Middle East energy flows could add to inflationary pressures and slow economic growth if oil prices remain elevated.

Tariffs, fiscal policy and rising federal debt remain part of the broader market backdrop, though their effects may develop more gradually than those of a sudden energy shock. A sustained increase in oil prices could complicate the inflation outlook, while tariffs and supply-chain disruptions may create additional cost pressures. Together, these factors have contributed to more reactive sector positioning, with investors adjusting allocations in response to geopolitical developments, inflation data and expectations for Federal Reserve policy.

Presidents and the Stock Market: How Should I Invest?

Bottom Line

Market performance during the Trump and Biden administrations has unfolded in two distinct economic environments: one shaped by tax policy changes and pre-pandemic growth, the other influenced by economic recovery, elevated inflation and higher interest rates. Trump’s current term has introduced additional considerations, including tariffs, fiscal policy uncertainty and the market effects of the war with Iran, particularly through higher energy prices.

Over longer periods, however, structural forces such as technological innovation, monetary policy and global supply chain dynamics tend to play a larger role in shaping investment outcomes than any single administration.

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