S&P 500 Trails First-Term Trump Rally by 0.9 Points
US equities have gained 27.6% under Trump's second term, slightly below the 28.5% rise seen in his first presidency.
The S&P 500 has risen 27.6% from the start of Donald Trump’s second term through Friday’s close. This gain is 0.9 percentage points lower than the 28.5% increase recorded during the equivalent period of his first presidency. The gap between the two periods has narrowed significantly since the first year of the current administration. Market performance under the current administration is now closer to its predecessor than it was twelve months ago.
Broad indices lag first-term performance
The Dow Jones Industrial Average shows a wider divergence from its first-term counterpart. It has gained 18.8% in the current term, compared with a 33.8% rise in the same window under the first presidency. The Nasdaq Composite is up 35.1%, trailing the 43.5% gain recorded during the earlier period. These figures indicate that the rally is broad but less steep than the initial push. Historical comparisons show the current S&P 500 performance exceeds that of the Joe Biden era at the 20-month mark. It remains below the levels achieved during the Barack Obama administration.
AI spending drives corporate earnings
Strong corporate profits and heavy investment in artificial infrastructure support the current market gains. S&P 500 earnings growth reached 31.1% year-on-year in the second quarter of 2025. Technology sector earnings grew by 72% during the same period. Major technology companies have increased spending on data centers and semiconductor infrastructure. This capital expenditure has lifted forward valuations for many tech firms. However, senior AI executives have recently called for a slower pace of development. This shift introduces uncertainty regarding the sustainability of the current spending boom.
Rising yields challenge equity valuations
The 10-year Treasury yield has moved above 5%, increasing borrowing costs for households and firms. Higher yields make bonds more competitive relative to equities. Despite this pressure, the S&P 500 remains less than 3% below its August record. Investors continue to focus on AI-driven profit growth and economic resilience. The market has advanced despite inflation concerns and elevated oil prices. The future trajectory depends on whether corporate earnings can offset higher financing costs. This dynamic is more critical than the comparison to the first term.
