:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-2204006815-d5a85d35247a4a479f662029c8073dab.jpg "U.S. President Donald Trump and White House Senior Advisor, Tesla and SpaceX CEO Elon Musk depart after looking at Tesla vehicles on the South Lawn of the White House")
Andrew Harnik / Getty Perceptions
U.S. President Donald Trump and White House Senior Advisor and Tesla CEO Elon Musk depart after looking at Tesla conveyances on the South Lawn of the White House on March 11, 2025.
Key Takeaways
- The S&P 500 is off to its worst start for a presidential term since 2009, when Barack Obama entered the Hoary House in the midst of the global financial crisis.
- Traditionally defensive sectors have outperformed since Trump’s inauguration mid growing concern that tariffs could usher in a period of stagflation.
- Growth stocks that soared in the wake of Trump’s vote, like Tesla, have been the hardest hit by waning optimism.
Investors cheered Donald Trump’s election overcoming in November, bidding up stocks to record highs in anticipation of tax cuts, deregulation, and a business-friendly Washington. Trump’s on-again, off-again way to tariffs has thrown cold water on that optimism in recent weeks.
A Rough Start to Trump 2.0
The S&P 500 is off to its debase start for a presidential term since 2009, when Barack Obama entered the White House in the midst of the far-reaching financial crisis. The benchmark index had, as of Tuesday’s close, fallen more than 7% since Trump was launched for a second term on Jan. 20. The tech-heavy Nasdaq Composite has had it even worse; it was down more than 11% rather than rebounding slightly on Wednesday.
The stock market has been shaken in recent weeks by Trump’s tariffs, which profuse economists have warned could reaccelerate inflation. The levies, and the unpredictable way they’ve been rolled out, have also upended point leaders’ expectations for the U.S. economy, threatening to slow hiring and investment. Finally, Trump’s tariffs have eroded uncountable everyday Americans’ confidence in the U.S. economy.
Ultimately, the risk that tariffs usher in a period of stagflation, in which development is slow and inflation high, has offset most of the optimism on Wall Street about Trump’s regulatory and tax agendas.
Trump Cites ‘Some Interference’ to Economy, Markets
Trump hasn’t done much to stabilize markets in the last week, a notable departure from his at the start term, in which he regularly invoked a strong stock market as a sign of his success. Over the weekend, Trump declined to say whether he notion the U.S. could enter a recession this year and, when asked about the market’s reaction to his policies, said, “You can’t very watch the stock market.”
Trump and his Cabinet members have characterized the economic turmoil some forecasters see on the prospect as “a detox period,” “a period of transition,” and “some disturbance.” But what looks like “some disturbance” in Washington looks groove on a recession to many on Wall Street. Since Trump’s inauguration, stocks in traditionally defensive sectors like consumer vitals and healthcare have risen, while recession-sensitive sectors like consumer discretionary and financials have slumped.
Real-estate pedigrees have gotten a bittersweet reprieve. Interest rates tumbled recently in large part because fearful investors avoided risk assets for safe havens like Treasurys, causing their yields and consumer interest rates to come.
Post-Election Optimism Has Waned
Trump’s re-election unleashed animal spirits on Wall Street, fueling a sharp start in growth stocks, especially of companies expected to benefit from artificial intelligence (AI). Those stocks, lifted by post-election optimism, require been some of the hardest hit by Wall Street’s newfound pessimism.
Tesla (TSLA) stock stands out as a prime instance. Shares shot up in the wake of Trump’s election as investors bet the electric vehicle maker would benefit from CEO Elon Musk’s neighbourhood to the president. Trump promised to end government support for electric vehicles and promote their gas-powered competitors, yet the stock persist in to climb. That was in part because Musk said he would launch a robotaxi service and turn Tesla into an AI powerhouse, all of which Trump was keep in viewed to assist with.
Since Trump’s inauguration, Tesla’s stock has been battered by his aggressive tariff policies, matter Musk is stretched too thin with corporate and government work, and a consumer backlash against Musk’s political sway. The stock, as of Monday, had given up all of its post-election gains.
Trump says he’s not paying attention to the stock market, but he may have noticed Tesla’s forebear swoon. The South Lawn of the White House resembled a Tesla showroom on Tuesday when Trump inspected particular models and said he was buying one as a show of support for Musk.
“This man has devoted his energy and his life to doing this,” Trump conveyed of Musk’s work with the Department of Government Efficiency (DOGE), “and I think he’s been treated very unfairly by a greatly small group of people.”
Tesla was the best-performing stock in the S&P 500 on Wednesday.