Prediction: The Trump Bull Market Will Soon End -- and the Federal Reserve Will Be the Surprise Culprit
From a purely data-based standpoint, the stock market has been practically unstoppable with Donald Trump in the White House. Although there have been periods of historic volatility, such as the five-week COVID-19 crash in February-March 2020, the ageless Dow Jones Industrial Average (^DJI +0.47%), benchmark S&P 500 (^GSPC +0.69%), and technology-driven Nasdaq Composite (^IXIC +0.90%) soared 57%, 70%, and 142%, respectively, during Trump's first term. The stock market's outperformance has continued since President Trump's second, non-consecutive term began on Jan. 20, 2025, with the Dow, S&P 500, and Nasdaq climbing by 14%, 15%, and 16%, respectively, as of the closing bell on Feb. 18, 2026. This Trump bull market has been fueled by an assortment of factors, such as the rise of artificial intelligence and the advent of quantum computing, as well as policies and proposals directly linked to Trump. President Trump delivering remarks. Image source: Official White House Photo by Andrea Hanks, courtesy of the National Archives. For example, the Tax Cuts and Jobs Act (Trump's flagship tax and spending law from his first term) permanently lowered the peak marginal corporate income tax rate from 35% to 21%, the lowest level since 1939. With businesses keeping more of their income, it's led to record share buybacks from S&P 500 companies -- more than $1 trillion estimated for 2025. Share repurchases can increase earnings per share for public companies with steady or growing net income. Although the Trump bull market may appear infallible, several headwinds are threatening to pull the rug out from beneath it. While some of these catalysts are well known, such as tariff-related uncertainty and historically high stock valuations, the eventual undoing of the Trump bull market may be a surprise culprit: the Federal Reserve. America's foremost financial institution is a powder keg of potential problems for Wall Street Normally, the Federal Reserve is Wall Street's finan
