Trump will need to deliver 'tangible progress' in his first 100 days for the stock market to go up

MW Trump will need to deliver 'tangible progress' in his first 100 days for the stock market to go up

By Isabel Wang

The first 100 days of Trump's second term will be crucial for proving the effectiveness of new policies - or market valuations could face a reset, says Westwood's Adrian Helfert

Donald Trump's second presidency is now underway after he took the oath of office as the 47th president of the United States on Monday - and investors will now keep a close eye on how U.S. stocks fare during his new administration's initial months.

History suggests stocks have tended to rise in the first 100 days of each presidential term. Since 1929, the large-cap benchmark S&P 500 index SPX has delivered an average return of 3.8% during this period, while the Dow Jones Industrial Average DJIA has averaged a 4% advance in the 100-day span. Both the S&P 500 and the Dow have finished higher 58.3% of the time, according to Dow Jones Market Data.

The tech-heavy Nasdaq Composite COMP has logged a modest 0.7% decline in the same 100-day period dating back to 1973, according to Dow Jones Market Data (see table below).

See: Here's what stock-market investors still need to price in as Trump returns to White House

Traditionally, the first 100 days of a U.S. president's term are often seen as an important period for the new commander-in-chief to implement key policy changes and demonstrate their new leadership in the White House.

Trump began his first presidential term with immediate, high-profile actions in 2017. During his first 100 days in office, the S&P 500 climbed 5.3%, and the Dow jumped 6.1% in the same period, according to Dow Jones Market Data.

See: Trump's Day 1 executive orders target EVs, inflation, immigration. Here's what could come next.

To be sure, each market is subject to its own dynamics, so the stock market's performance after Trump's inauguration on Monday doesn't have to follow any script. But hopes have been high on Wall Street ever since Trump won the presidential election in early November, as investors have overwhelmingly focused on how he plans to execute his agenda on tariffs, crypto, energy and immigration - and how those policies could boost the outlook for the world's largest economy.

"With an ambitious policy agenda, Trump's first 100 days in office will provide an early indication of his ability to sustain momentum in delivering on his promises," said Seema Shah, chief global strategist at Principal Asset Management. "Significant challenges and heightened uncertainty around the speed and scope of policy implementation remain."

Adrian Helfert, chief investment officer of alternative and multiasset portfolios at Westwood Holdings Group, said Trump's policy changes may not quickly alter the economy as markets previously expected because "significant economic shifts take time, and the U.S. economy is a 'supertanker' that can't change course quickly."

That's why the first 100 days of Trump's second term will need to deliver "tangible, measurable progress" to support these expectations and have actual changes reflected in economic data, Helfert wrote in emailed commentary. For example, investors need to see improving business sentiment, increased capital investment and a positive response in some of the leading economic indicators, he said.

As a result, the initial months of 2025 could be "one of the most consequential 'first 100 days' periods" in recent memory, Helfert said.

"If tangible improvements in business sentiment and economic indicators don't materialize by spring 2025, market valuations, which [have] already [been] above historical averages, could face a significant reset," he wrote.

See: Opinion: Trump's first 100 days: What he must do on trade, immigration and tax cuts

U.S. stocks were higher on the first trading day of Trump's second term. The S&P 500 was popping 0.9% at around 6,049 on Tuesday afternoon, while the Dow was surging over 1% and the Nasdaq was up 0.8%, according to FactSet data.

-Isabel Wang

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January 21, 2025 14:29 ET (19:29 GMT)

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