Look, everyone has an opinion on the "Trump trade." Whether you love him or hate him, the numbers don't really care about your feelings. If you've been watching the Dow Jones Industrial Average lately, it's been a wild ride that makes a Six Flags coaster look like a kiddie train.
Honestly, trying to track the Dow since Trump took office—both the first time in 2017 and his current return to the White House in 2025—is kinda like trying to read a map during an earthquake. Things move fast. By January 16, 2026, the Dow was sitting around 49,354 points. That is a massive jump from the roughly 19,800 points where it stood on his first Inauguration Day back in 2017.
But a single number doesn't tell the whole story. Not even close.
The First Go-Around: 2017 to 2021
When Trump first walked into the Oval Office, the market was already on a bit of a heater. But then things accelerated. Between Election Day 2016 and his departure in January 2021, the Dow climbed about 56%. To put that in perspective, that was the best performance for a Republican president since the 1920s. People like Ryan Detrick, a chief market strategist, often point out that while this was a huge win, it actually trailed the annualized returns of Obama and Clinton.
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Context matters.
In that first term, we saw the Tax Cuts and Jobs Act of 2017 basically dump jet fuel on corporate earnings. Companies weren't just growing; they were buying back their own shares at record rates. We're talking hundreds of billions of dollars. Then, of course, 2020 happened. The COVID-19 crash saw the Dow plummet, but the recovery was just as violent.
Trump 2.0: The 2025 Surge and the "April Chill"
Fast forward to now. Trump took office again in January 2025, and the "Trump Trade" came back with a vengeance. But it wasn't a straight line up. If you remember April 2025, it was a total mess. The administration announced a sweep of reciprocal tariffs under the International Emergency Economic Powers Act (IEEPA), and the market absolutely hated it. The S&P 500 dropped nearly 20% in seven weeks. The Dow felt the sting too.
However, the rebound was striking. Once the administration started pausing some of those tariffs and shifting toward bilateral negotiations (like the deals with the EU and Japan that settled at a 15% rate), investors breathed a sigh of relief.
By the end of 2025, the Dow had posted a solid 12.97% gain for the year. Not quite the blockbuster 25% we saw in 2017, but considering the tariff-induced heart attack in the spring, most traders were just happy to be in the green.
Why the Market is Obsessed with "The One Big Beautiful Bill"
In July 2025, Trump signed the One Big Beautiful Bill Act (OBBBA). Terrible name? Maybe. But the market loved the content. It extended those 2017 tax cuts and even shaved the corporate rate down from 21% to 20%—and even 15% for certain companies.
This bill is the primary reason why we're seeing a trillion-dollar trend in stock buybacks right now. Companies like Apple, Alphabet, and Nvidia are flush with cash and they’re using it to reward shareholders. In the first quarter of 2025 alone, S&P 500 companies set a record with $293.5 billion in share repurchases. When companies buy back their own stock, the remaining shares become more valuable. It’s a simple supply-and-demand trick that keeps the Dow looking healthy even when the underlying economy feels a bit shaky.
The 2026 Reality Check
So, where are we now? As of mid-January 2026, the Dow is hovering near all-time highs, but the "winner-takes-all" dynamic is getting extreme. Most of the gains are being driven by the "Magnificent Seven" and the AI supercycle. J.P. Morgan research suggests AI is driving earnings growth of 13-15%, which is way above the historical trend.
But there are red flags. Real ones.
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- Inflation is sticky: It’s hovering around 2.5%, and those tariffs on lumber and furniture aren't helping.
- The Fed is awkward: Chair Jerome Powell and Trump have a... complicated relationship. Trump has hinted at wanting to replace him before his term ends in May 2026, though he’s backed off lately.
- Debt is exploding: The CBO thinks the latest tax laws will add $3.4 trillion to the federal debt over the next decade.
Sector Winners and Losers
If you're looking at your portfolio, it's not a rising tide for every boat.
Traditional Energy and Finance have done great. Deregulation is the word of the day. Analysts like Mike Mayo at Wells Fargo have been banging the drum for Wall Street banks, saying we've entered a new era where they can finally breathe.
Retail and International Trade, however, are sort of a mess. The effective tariff rate is creeping toward 12%, and some analysts think it’ll hit 14.4% soon. That makes stuff more expensive for you and me, and it eats into the margins of companies that rely on global supply chains.
Is the Dow Overvalued?
This is the billion-dollar question. Some indicators are sounding alarms for the first time in 25 years. We’re seeing record concentration in just a few stocks. If Nvidia or Microsoft has a bad day, the whole index feels it.
That said, the "soft landing" narrative is still alive. Job growth slowed down to about 64,000 in December 2025, which isn't great, but it's not a recession yet. The market is basically betting that the tax cuts and deregulation will outweigh the drag from tariffs and immigration changes.
Actionable Insights for Your Portfolio
Don't just watch the ticker. Here is what you actually need to do to navigate the Dow since Trump took office:
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- Watch the effective tariff rates: If the rate crosses 15%, expect more volatility in consumer discretionary stocks. Keep an eye on the Yale Budget Lab reports—they’re usually ahead of the curve on this.
- Follow the buyback trail: Look for companies with high "buyback yields." If the OBBBA remains unchallenged, these companies have a built-in floor for their stock price.
- Hedge for May 2026: The Fed leadership transition (or lack thereof) will be a massive market mover. Volatility (VIX) spiked to 60 back in April 2025; don't be surprised if it jumps again as Powell’s term expires.
- Diversify away from the "Mag 7": The concentration is risky. Consider mid-cap stocks that benefit from domestic deregulation but aren't as sensitive to global trade wars as the tech giants.
The market under Trump isn't a "set it and forget it" environment. It’s active. It’s noisy. And it requires a thick skin. If you can handle the 1,000-point swings, there’s money to be made, but don't assume the 2017 playbook works perfectly in 2026. The debt is higher, the trade wars are more complex, and the AI hype is a variable we’ve never seen before.
To keep your strategy sharp, you should regularly review your exposure to sectors most sensitive to "reciprocal tariffs" and ensure your fixed-income allocations are adjusted for a "higher-for-longer" interest rate environment if the Fed remains hawkish.