Stocks Rally: S&P Up 18% Since Trump Took Office

Lead

The U.S. equity market has recorded outsized gains since the inauguration of President Trump on January 20, 2025, with the S&P 500 up roughly 18% through April 24, 2026 according to market aggregates cited by Yahoo Finance (Apr 25, 2026). CNN's data chief characterized the move as stocks rising "like a rocket," a remark that has refocused political debate onto market outcomes ahead of the mid-year policy calendar. Major indices have not moved in isolation: the Nasdaq Composite outperformed with an approximate 25% gain over the same 15-month window, while the Dow Jones Industrial Average lagged at about a 12% increase, per public market feeds (Yahoo Finance, Apr 25, 2026). These headline numbers coincide with a macro backdrop of sustained policy rates, robust corporate earnings in key sectors, and a US unemployment rate remaining near 3.8% in early 2026 (BLS, Apr 2026), creating a bifurcated environment for fixed-income and equity allocations.

Context

The headline performance since Jan 20, 2025 must be considered in both political and macroeconomic context. Market participants priced expectations of regulatory rollbacks, corporate tax clarity and an explicit push to shore up industrial and energy sectors in the immediate aftermath of the 2024 election; those expectations helped drive early gains in cyclical and value-oriented equities. Concurrently, the Federal Reserve held policy rates at a terminal-like range—around a 5.25%-5.50% federal funds target during much of early 2026—while signaling that further easing would be contingent on additional disinflation, framing equities as a relative asset of choice versus low-yield alternatives (Federal Reserve statements, 2025–2026). Political commentary, including the remark by CNN’s data chief that markets were up "like a rocket" (Yahoo Finance, Apr 25, 2026), has amplified public focus on market moves as a political barometer, but the market drivers are multi-faceted and extend beyond headline politics to earnings, margins, and sector rotation.

To place the recent run in historical terms, the roughly 18% increase in the S&P 500 from Jan 20, 2025 to Apr 24, 2026 compares to a long-term average annualized return near 10% for the index. That suggests the current period is above trend but not unprecedented when measured against other concentrated post-election rallies. Equally important is the composition of returns: technology and large-cap growth names delivered a disproportionate share of total market gains, which produced divergence between the cap-weighted S&P 500 and equal-weighted indices. This dispersion highlights concentration risk and indicates that headline index gains may mask underlying fragility in breadth.

Data Deep Dive

A granular look at the numbers behind the headlines clarifies which segments contributed most to the advance. Tech-heavy Nasdaq outperformance of about 25% versus the S&P 500's 18% and the Dow's 12% suggests a continuation of large-cap dominance; AAPL and MSFT were the top contributors to index cap-weighted returns during multiple quarters in 2025–2026 (Yahoo Finance, company filings). Sector-level returns show information technology and communication services generating mid-to-high 20s percent returns over the period, while energy and materials posted double-digit gains driven by stronger commodity prices and higher global demand forecasts. In contrast, the Russell 2000 small-cap benchmark delivered approximately 7% over the same interval, underperforming large caps and indicating a preference among investors for scale amid signaling uncertainty (Russell Index data, Apr 2026).

Earnings delivered an important layer of support. S&P 500 aggregate earnings per share (EPS) increased year-over-year in both Q3 and Q4 of 2025, with consensus estimates for 2026 EPS growth around 6–8% at the time of the April 2026 reporting season (FactSet, April 2026). Those earnings beats reduced the starting valuation risk for many large-cap names and justified a re-rating in parts of the market. Still, forward price-to-earnings multiples remained elevated versus historical averages—reflecting both a compression in bond yields earlier in the cycle and continued investor preference for growth—which heightens sensitivity to interest-rate volatility.

Sector Implications

The market advance has been anything but uniform across sectors. Technology has led, with mega-cap software and semiconductor firms recovering fast from 2024 valuation resets; semiconductors benefited from pick-up in industrial capex and AI-related demand, with ASML and NVDA cited frequently by analysts as structural winners (company reports, 2025–2026). Financials have also been notable beneficiaries as rising nominal rates widened net interest margins for large banks early in the period, but pass-through effects in credit cost and loan demand created a more complex earnings profile for regional banks. Energy stocks outperformed early in 2026 on higher Brent crude prices—up approximately 14% in the first quarter of 2026 relative to Q4 2025—driven by OPEC+ supply policy and persistent global demand (ICE, Q1 2026 data).

The rotation pattern has important implications for portfolio construction. Passive allocations concentrated in cap-weighted indices captured the bulk of gains, while active managers with exposure to small caps or cyclical value underperformed in aggregate. For institutional investors, the concentration of returns into a handful of mega-cap names increases implementation risk, and rebalancing approaches should be carefully calibrated to account for potential mean reversion. Continued outperformance by tech and communication services would imply increased correlation risk across growth-oriented holdings, while any policy shift or earnings disappointment could quickly widen dispersion.

Risk Assessment

The elevation in headline index returns brings several tail risks into sharper relief. First, valuation sensitivity to interest rates means that a tighter-than-expected Fed path—whether due to an inflation uptick or labor-market surprise—could trigger a rapid derating. The current macro readings showed CPI year-over-year moderation to roughly 3.5% in early 2026, yet services inflation retained upward pressure in certain subcomponents (BLS/CPI, Mar 2026), keeping the Fed on alert. Second, geopolitical risks and trade policy shifts tied to administration priorities could create discontinuities in supply chains that would disproportionately affect sectors like semiconductors and industrials.

Political narratives also pose a non-negligible risk to sentiment. The CNN data chief’s public characterization of market moves has been seized upon by both political camps, and heightened commentary ahead of key legislative windows (tax reform, infrastructure allocation) increases the chance that markets will react to rhetoric rather than fundamentals. Finally, the concentrated nature of the rally increases single-stock risk: several mega-cap stocks accounted for a large share of index gains, and idiosyncratic shocks to any of these names could materially affect cap-weighted index performance in the short term.

Outlook

Looking forward, continuations of present trends are plausible but not assured. If corporate margins remain resilient and revenue growth sustains the current trajectory, indices could absorb modest interest-rate volatility without a material drawdown. However, should inflation reaccelerate or growth indicators slow meaningfully, valuation compression could precipitate a sharper correction than implied by historical shocks. Market watchers should pay close attention to upcoming data points: May and June 2026 CPI readings, Q2 2026 corporate guidance season, and any Federal Reserve communications signaling a change in rate path.

Institutional positioning will likely remain cautious-to-neutral: hedge funds and active managers may hedge downside while preserving upside exposure to concentrated growth names, whereas long-only institutions may evaluate diversification strategies that reduce single-stock concentration. Tactical opportunities may arise in mid-cap cyclicals if earnings revisions turn positive, but such positioning requires careful timing given present dispersion across market capitalizations.

Fazen Markets Perspective

Fazen Markets views the current rally as a classic late-cycle diffusion: strong headline returns concentrated in large-cap growth amid mixed breadth and steady—but not collapsing—economic indicators. The political framing of markets as a near-term barometer of administration performance is analytically seductive but operationally noisy; investors should prioritize measurable drivers such as corporate guidance revisions, margin trajectories and rate expectations. A contrarian implication is that if breadth begins to improve (with small and mid-cap indices closing the gap to large caps), the market can sustain multiple expansion without a rate-driven unwind. Conversely, if breadth deteriorates and macro surprises re-intensify, the most likely immediate adjustment will be a pullback concentrated in the highest-multiple names rather than a broad-based bear market.

For institutional allocators, the non-obvious action is not to chase headline returns but to use current dispersion as a source of potential alpha through active rebalancing, volatility-driven strategies, and selective hedging. Our work suggests that markets with high cap concentration historically present enhanced opportunity for concentrated active managers who can access idiosyncratic short and long exposures; by contrast, passive investors should be mindful of implicit concentration risk and consider rebalancing rules that reduce skew.

Bottom Line

Equity markets have produced substantive gains—S&P 500 roughly +18%, Nasdaq about +25% from Jan 20, 2025 to Apr 24, 2026—but those gains are concentrated and sensitive to policy and earnings news. Institutional investors should monitor breadth, rate signals, and corporate guidance closely and calibrate exposure to concentration risk.

Disclaimer: This article is for informational purposes only and does not constitute investment advice.

FAQ

Q: How unusual is a 15-month rally following a presidential inauguration?

A: Historically, early-term rallies occur but vary significantly by cycle; the current 18% S&P advance is above long-term annual averages but within historical post-election ranges. Presidential-party correlations are statistically weak relative to macro and earnings drivers, so political change is only one of several determinants of market direction.

Q: What are practical implications for fixed-income allocations during this rally?

A: With policy rates near 5.25%–5.50% (Fed statements, early 2026) and inflation showing gradual improvement, fixed-income investors face duration risk if rates re-price higher. Practical steps include laddering maturities, considering floating-rate instruments, and maintaining liquidity to exploit volatility-driven entry points.

Q: Are there historical precedents for markets rising while economic indicators slow?

A: Yes. There have been multiple episodes where equities climbed on earnings resilience or multiple expansion despite slowing growth—most notably parts of the late-1990s and 2017–2018 cycles. The key variable that determined subsequent outcomes in those episodes was the trajectory of central-bank policy and corporate profit margins.

Internal resources

For further context on market drivers and sector performance, see our equities and macro coverage at equities and macro.