President Trump has been relatively quiet about the stock market since his inauguration in January, even after the S&P 500 hit a record high on February 19. The index has since fallen almost every day and is now lower than when Trump took office. Other indexes, including those more closely tied to the economy, have also fallen.
Investors are becoming increasingly nervous about a potential sell-off. Consumer sentiment is souring, and there is growing weariness over various policy proposals coming out of Washington. Andrew Brenner, head of international fixed income at National Alliance Securities, said, “The tariff rhetoric has become daily and extreme, sentiment is awful, and trading is on edge.”
The market’s composition has shifted, with the A.I. giants, known as the Magnificent Seven, accounting for roughly a third of the entire S&P 500 index by market value.
This concentration makes for a sometimes volatile market. Nvidia, a key player in A.I. chip manufacturing, has fallen almost 10 percent since Trump’s inauguration. Investor nervousness is palpable.
Bank of America’s latest survey of fund managers indicates many are wary of the market’s uncertain direction, given potential risks such as reciprocal tariffs sparking a trade war and disrupting the Federal Reserve’s efforts to combat inflation. Almost 90 percent of survey respondents believe that stocks are overvalued. The CBOE Skew Index, which tracks investor hedging activity against a potential market plunge, hit its highest level ever on February 18, the day before the S&P 500 reached its peak.
Trump’s silence on market troubles
This suggests that investors are concerned about a potential downturn. US stocks largely slid Tuesday as investors digested a poor outlook from a consumer survey that showed heightened concern about inflation.
The Conference Board’s consumer confidence index saw its largest monthly decline since August 2021. All three major US stock indexes are in the red since President Donald Trump took office on January 20. Bitcoin, which surged as high as $106,000 around Trump’s inauguration, is down about 16% in the past month, trading around $88,000 on Tuesday.
The yield on the 10-year US Treasury slid to 4.29% on Tuesday as investors piled into bonds, signaling concerns about uncertainty and weaker-than-expected economic growth. While US stocks might be stretched, testing the bull market continues. The Dow and the broader S&P 500 have gained since Trump’s reelection in November and are still slightly in the green since the start of 2025.
Yet the S&P 500 posted back-to-back gains of more than 20% in 2023 and 2024, raising questions about whether the bull rally can continue in 2025. According to Charles Schwab’s quarterly trader client sentiment, two out of three traders believe the market is overvalued. Yet bullish traders still outnumber bearish traders 51% to 34%.
While there is looming uncertainty, some strategists think fundamentals like strong corporate earnings will drive stocks higher.
Photo by; Gautam Krishnan on Unsplash
