Statistically, the stock market tends to rise under most presidents. Dating back to the late 1890s, 26 of the last 33 terms have featured gains in the iconic Dow Jones Industrial Average (DJINDICES: ^DJI) or benchmark S&P 500 (SNPINDEX: ^GSPC).
But under Donald Trump, annualized gains in the Dow, S&P 500, and tech-driven Nasdaq Composite (NASDAQINDEX: ^IXIC) have been among the best of any president. During President Trump’s first, non-consecutive term, the Dow, S&P 500, and Nasdaq gained 57%, 70%, and 142%, respectively.
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While an assortment of catalysts has fueled the current bull market rally, including the evolution of artificial intelligence (AI), record S&P 500 share buybacks, and a Federal Reserve rate-easing cycle that began in September 2024, headwinds are also mounting.
Although no short-term directional moves in Wall Street’s major stock indexes can ever be predicted with concrete accuracy, the probability of a stock market crash under Donald Trump is climbing — and the blame may lie with the president.
At any given time, one or more catalysts are threatening to upend the stock market. Right now, none stands out more than the Iran war.
On Feb. 28, at Trump’s command, U.S. military forces, along with Israel, commenced attacks against Iran. Shortly after these operations began, Iran closed the Strait of Hormuz to virtually all oil exports. Even though a ceasefire has been brokered between the U.S. and Iran, as of this writing on April 11, shipping traffic through the Strait of Hormuz hasn’t returned to normal.
According to the Energy Information Administration, approximately 20 million barrels of liquid petroleum, representing 20% of global demand, pass through the Strait of Hormuz daily. In other words, Trump’s actions have led to the largest energy supply disruption in modern history.
The law of supply and demand is straightforward: when the demand for a good or service outstrips its supply, prices should rise until demand tapers off. Since late February, crude oil prices have skyrocketed, resulting in a significant increase in fuel prices for consumers and higher transportation/production costs for businesses.
