2026 Stock Market Crash Looms Under Trump: Data Insights
Investors are navigating uncertain waters as Wall Street grapples with the performance of the stock market under President Donald Trump. Since Trump’s inauguration on January 20, 2025, major indices like the Dow Jones, S&P 500, and Nasdaq Composite have seen impressive gains. However, concerns about a potential stock market crash in 2026 are leading to discussions about future risks.
Exceptional Stock Market Performance
During Donald Trump’s initial term, from 2017 to 2021, the stock market thrived. Key indices reflected remarkable growth:
- Dow Jones Industrial Average: Increased by 57%
- S&P 500: Gained 70%
- Nasdaq Composite: Soared by 142%
The current period has continued this trend, with all three indices rallying by approximately 14% to 15% since Trump began his second term. Yet, the optimism surrounding this bull market is tempered by rising concerns about future downturns.
Indicators of a Potential Market Correction
Two main factors suggest a potential for significant market declines in 2026. The first is the S&P 500’s Shiller Price-to-Earnings (P/E) Ratio. This metric is currently hovering between 39 and 41, approaching unprecedented levels. Historically, a Shiller P/E exceeding 30 during a bull market has preceded significant declines in the Dow and S&P 500.
The second factor revolves around the upcoming midterm elections in November 2026. Trump entered his second term with the Republican Party controlling both the House and Senate. However, historical trends indicate that the party in power often loses seats during midterms. A split Congress could hinder major legislative initiatives and contribute to market volatility, as seen in the past.
Historical Trends During Midterm Elections
Data from Carson Investment Research indicates that stock market corrections during midterm years tend to be sharper. Since 1950, the average decline in the S&P 500 during these elections has been around 17.5%. Notably, during Trump’s first term, the S&P dropped close to 20% during the same period.
What History Tells Us
Despite the potential red flags, history reveals a different narrative for patient investors. Corrections and bear markets are typical and often stem from emotional reactions. Analysis shows that:
- Bear markets average about 286 days and seldom exceed one year.
- Current bull markets, like the ongoing “AI Bull,” often last significantly longer, with the average duration surpassing 1,000 days.
Investors are encouraged to remain optimistic. Historical data indicates that patience can yield substantial returns, even following market corrections.
Conclusion: The Landscape Ahead
While the possibility of a stock market crash in 2026 under Trump cannot be dismissed, historical data provides reassurance. Temporary downturns are a normal part of market cycles. The key takeaways for investors are to monitor key indicators, understand market dynamics, and maintain a long-term perspective for wealth growth.
