President Donald Trump Claims the Stock Market Will Double by the End of His Term, but History Says Otherwise

Statistically, outsize stock market returns have been the norm under President Donald Trump. During his first, non-consecutive term, the timeless Dow Jones Industrial Average (DJINDICES: ^DJI), benchmark S&P 500 (SNPINDEX: ^GSPC), and technology-powered Nasdaq Composite (NASDAQINDEX: ^IXIC) gained 57%, 70%, and 142%, respectively.

His second term has, thus far, been an encore performance. Despite short-lived bouts of heightened volatility from his initial tariff announcement in April 2025 and the Iran war in March 2026, the Dow, S&P 500, and Nasdaq Composite have rallied 24%, 29%, and 36% since Trump’s second-term inauguration.

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Stocks have soared with Donald Trump at the wheel

Several catalysts have acted as the wind in Wall Street’s sails, including (but not limited to):

• The rise of artificial intelligence (AI) and the unparalleled spending on the AI infrastructure build-out.

• Better-than-expected corporate earnings.

• Record S&P 500 share buybacks (in 2025), courtesy of Trump’s tax and spending laws that reduced the peak marginal corporate income tax rate to its lowest point (21%) since 1939.

• Initial public offering euphoria, with Space Exploration Technologies (SpaceX) rewriting the stock market’s record books.

• Excitement surrounding high-profile stock splits.

President Trump has frequently referenced new stock market highs when speaking with the press and relied on the performance of equities as something of a measuring stick for his administration’s success. But he doesn’t believe Wall Street’s best days are in the rearview mirror.

According to a Truth Social post from February, the president expects the stock market to double by the time he leaves the Oval Office in January 2029. Specifically, he called for the Dow Jones Industrial Average to reach 100,000 and cited “our great tariffs” as a catalyst that’ll send this time-tested index to new heights.

While there’s no denying that the Dow’s, S&P 500’s, and Nasdaq’s annualized returns under Donald Trump have outpaced most other presidents since the late 1890s, history says Trump’s stock market prediction will fall flat for several reasons.

Statistically, tariffs have hindered, not helped, the U.S. economy

The first historical issue has to do with his claim that tariffs will lift the stock market.

In April 2025, Trump revealed his Liberation Day tariffs, which consisted of a sweeping global tariff and higher reciprocal tariffs on dozens of countries deemed to have adverse trade imbalances with America. The purpose of these tariffs was to promote domestic manufacturing and allow U.S.-made goods to be more price-competitive with those being brought in from overseas.

Although a February 2026 U.S. Supreme Court ruling invalidated many of these tariffs, Trump and his administration have found workarounds to reimpose sweeping global tariffs on dozens of countries.

However, an analysis (“Do Import Tariffs Protect U.S. Firms?”) published by four New York Federal Reserve economists writing for Liberty Street Economics found that Trump’s tariffs hinder rather than help U.S. businesses.

In December 2024, these four New York Fed economists examined the impact that Trump’s China tariffs had on the U.S. economy during his first term. On average, companies affected by Trump’s China tariffs experienced declines in labor productivity, employment, sales, and profits from 2019 to 2021.

Statistically, nothing suggests tariffs are going to help the stock market reach new heights.

The second-priciest stock market in 155 years would like a word…

Furthermore, President Trump’s prediction that the stock market can double in the final three years of his second, non-consecutive term is a slap in the face to historical precedent concerning stock valuations.

Admittedly, “value” is a subjective term that’s going to vary from one investor to the next. Without a one-size-fits-all blueprint to evaluate individual companies or the broader market, there’s always some subjectivity to valuing equities.

However, the S&P 500’s Shiller Price-to-Earnings (P/E) Ratio, also known as the Cyclically Adjusted P/E Ratio (CAPE Ratio), has a knack for cutting through this subjectivity. The Shiller P/E has been backtested to January 1871 and has averaged a multiple of 17.4. In early June, it peaked at 42.84, marking the second-highest reading during a continuous bull market, spanning 155 years.

There have only been six instances in which the CAPE Ratio has exceeded 30, including the present, and the previous five all ended in (temporary) disaster for the stock market. Eventually, the Dow Jones Industrial Average, S&P 500, and/or Nasdaq Composite fell 20% or considerably more.

Although the S&P 500’s Shiller P/E Ratio can’t pinpoint when the music will stop on Wall Street or what catalyst will send the stock market over the proverbial cliff, it makes clear that overly expensive markets lack staying power.

Investors are taking outsize risks, and that’s a recipe for disaster

Last but not least, investors are taking outsize risks amid a historic bull market under Trump — and history says this never ends well.

Outstanding margin debt provides a way to measure “risk-taking” on Wall Street. Margin represents money that investors borrow from their broker to short-sell (wager against) or purchase securities. When used to buy securities, margin acts as a form of leverage.

Although margin can boost profits when a security moves in the desired direction, it can also amplify losses if it moves the opposite way.

In June, FINRA reported that outstanding margin debt at brokers hit an all-time high of approximately $1.502 trillion. More importantly, margin debt has risen by a whopping 77% over 14 months (April 2025-June 2026). This is only the fourth time in the last three decades that outstanding margin debt has skyrocketed at least 65% in a short time frame.

The previous three times we observed a parabolic move in outstanding margin debt were immediately preceding the bursting of the dot-com bubble, just months before the Great Recession took shape, and a few months before the start of the 2022 bear market.

Historically speaking, the stock market’s chance of doubling before the end of Trump’s second term is practically zero.

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President Donald Trump Claims the Stock Market Will Double by the End of His Term, but History Says Otherwise was originally published by The Motley Fool