Key Takeaways
- The S&P 500 has declined 14% since President Trump’s inauguration three months ago, the U.S. stock market’s worst start to a presidency since at least 1928.
- Trump’s “America First” agenda has, ironically, hammered U.S. stocks harder than the rest of the world; the average country-level ETF has risen 3.2% since Jan. 20, according to an analysis by Bespoke Investment Group.
- European stocks have been boosted by plans on the continent to increase defense spending in light of Trump’s uncertain commitment to the NATO alliance.
Trump 2.0 was supposed to usher in a stock market bonanza. That’s not what’s happened in the first few months.
The S&P 500 has declined 14% since President Trump’s inauguration, marking the stock market’s worst start to a presidency in the last century, according to an analysis released Monday by Bespoke Investment Group.
The S&P 500’s drop is “by far the biggest decline the index has seen three months into a Presidential term since 1928,” the analysts wrote. The second worst came during FDR’s third term in 1941 when stocks fell 9% amid a domestic debate about whether America should enter the Second World War.
The stock market was gripped with euphoria in November and most of December last year, when the S&P 500 rode Trump’s promises of lower taxes and deregulation to record highs. At the time, investors dismissed the President-elect’s tariff threats as a negotiating tactic. Since then, Trump’s unpredictable, ever-changing trade policy has plunged financial markets into turnmoil and cast a dark cloud over the economy. U.S. stocks, which fell sharply again Monday, have suffered some of their worst days in decades amid the uncertainty.
Few stock markets have suffered more from President Trump’s “America First” agenda than America’s. Of 45 country ETFs surveyed by Bespoke, only Taiwanese stocks, down 15.5%, have had a rougher start to Trump’s presidency. The average country ETF has risen 3.2% since Trump’s inauguration, about 18 percentage points of outperformance against the S&P 500.
European stocks have been among the best performers this year. The iShares MSCI Germany ETF (EWG) has risen 10.8% in the last three months, boosted by new stimulus measures and plans to boost defense spending. Stock markets in Italy (+10.2%), the UK (+6.6%), and France (+3.7%) have also outperformed the U.S. despite taking a hit early this month from Trump’s “Liberation Day” tariff announcement.
