You probably remember the vibes on election night 2024. Half the country was certain the sky would fall, and the other half thought we were headed for a golden age. Fast forward to early 2026, and the stock market since election has been anything but predictable. Honestly, if you just looked at the headlines, you’d think it was a straight line up. It wasn’t. We’ve seen a 20% face-plant, a massive trade-war-induced panic, and a tech sector that just won’t quit.
Markets hate uncertainty. But they love clarity. Once the dust settled in November 2024, Wall Street did what it always does: it started pricing in the future.
The Wild Ride of 2025: From Panic to Record Highs
The first year of the second Trump administration was a rollercoaster. Stocks didn't just drift higher; they fought for it. By April 2025, the S&P 500 actually took a massive hit, dropping nearly 20% in less than two months. Why? Tariffs. On April 2, reciprocal tariffs were announced, and investors freaked out. It was a classic "sell first, ask questions later" moment.
But then things got interesting. The administration paused many of those tariffs to negotiate. That pivot, combined with July’s tax cut legislation—the "One Big Beautiful Bill Act"—sent earnings expectations through the roof.
By the Numbers: Where We Stand Now
If you’ve been holding on, you’ve likely done well. As of mid-January 2026, the S&P 500 is sitting near 6,940, up significantly from where it ended 2024.
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- S&P 500: Gained about 18% in 2025 (including dividends).
- Nasdaq Composite: Jumped over 21% as the AI craze found a second wind.
- Dow Jones: Surpassed the 49,000 mark recently.
- Bitcoin: It’s been a wild one, hitting $120,000 before settling back down toward the high 80s.
The "Magnificent Seven" Isn't the Only Game in Town
For years, everyone talked about the same seven stocks. You know the ones: Apple, Nvidia, Microsoft... basically the companies that own your digital life. While they’re still heavy hitters, the stock market since election has finally started to "broaden out."
In 2023, the "Mag 7" drove a staggering 63% of the market's total returns. By late 2025, that number dropped to about 43%. This is actually a great sign for the average investor. It means the rally isn't just a tech bubble; it’s hitting financials, industrials, and even utilities. Small-cap stocks, tracked by the Russell 2000, finally woke up too, gaining roughly 13% since the inauguration as investors bet on domestic manufacturing.
Interest Rates and the "Powell Pivot"
Jerome Powell has had a busy year. Even with a new administration, the Fed has stayed pretty independent—sorta. They’ve been cutting rates as inflation cooled from the 3% range down toward 2.5%.
We saw quarter-point cuts in September, October, and December of 2025. Currently, the federal funds rate sits between 3.5% and 3.75%. This is a huge relief for anyone with a mortgage or a business loan. Lower rates make stocks look more attractive because you aren’t getting as much "free" money from sticking your cash in a savings account.
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What’s Actually Driving Growth?
It’s not just politics. It’s the "AI payoff." In 2024, everyone was investing in AI but nobody knew if it would actually make money. By the second half of 2025, companies like Broadcom and Nvidia started showing real, measurable profits from all that spending.
According to research from Fidelity, about 60% of US GDP growth is now tied to the AI buildout. That’s insane. It’s also why energy stocks have been so weirdly resilient. All those AI data centers need power—massive amounts of it. While solar and wind stocks took a hit right after the election due to fears about the Inflation Reduction Act being gutted, the demand for "any power we can get" has kept the sector afloat.
The Risks Nobody Mentions
It’s not all sunshine and green candles. We have to talk about the debt. The CBO (Congressional Budget Office) projects that the recent tax cuts could add $3.4 trillion to the federal debt over the next decade. At some point, the bond market might throw a tantrum about that.
Also, consumer sentiment is kind of a mess. Even though the stock market is at record highs, "regular" people feel the sting of prices that haven't actually gone down—they’re just rising more slowly. Credit card debt is at an all-time high, and if the labor market continues to soften (we only added 64,000 jobs in December), the "soft landing" might get a little bumpy.
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How to Handle Your Portfolio in 2026
If you're looking at the stock market since election and wondering if you missed the boat, take a breath. Markets are trading at high valuations—the S&P 500 has a forward P/E ratio around 22.5x—which means stocks aren't "cheap" by historical standards.
Actionable Next Steps for Your Money:
- Check Your Tech Weight: If you’ve been riding the AI wave, you might be "overweight" in tech. Consider rebalancing into industrials or financials, which are benefiting from the broader economic shift.
- Watch the 10-Year Treasury: If yields start creeping back toward 4.8%, expect stocks to get shaky. The current 4.1% range is the "sweet spot" for growth.
- Don't Ignore Small Caps: With the focus on domestic manufacturing and lower interest rates, smaller US companies (Russell 2000) often have more room to run than the giant tech monoliths.
- Review Your Cash: With the Fed cutting rates, those high-yield savings accounts won't stay "high" forever. It might be time to lock in rates with CDs or move some of that dry powder into the market on the next 5% dip.
The biggest takeaway? The market has learned to live with the volatility of trade headlines. It’s become "adaptable," as the analysts at U.S. Bank put it. As long as corporate earnings keep growing—and they’re projected to rise about 8% this quarter—the path of least resistance for the market remains up.