Trump Bull Market Nears End: Two Historical Warning Signs
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- Trump's stock market record includes a first-term S&P 500 gain of 70%, a 57% Dow rise, and a 142% Nasdaq jump, with the first year of his second term delivering double-digit gains across all three indexes.
- Iran war uncertainty has driven equity volatility over the past five weeks, briefly pushing both the Dow and Nasdaq Composite into correction territory.
- The second quarter of a president's second year (April 1 – June 30) is the only quarter to post an average negative S&P 500 return (-2.8%) since 1950, per Carson Group Chief Market Strategist Ryan Detrick.
- Midterm-year peak-to-trough S&P 500 declines have averaged 17.5% since 1950, and the benchmark fell nearly 20% during Trump's first midterm cycle.
- The S&P 500's Shiller P/E (CAPE) ratio entered 2026 at its second-highest level in 155 years, hovering between 39 and 41 versus a 17.35 long-term average dating to 1871.
- All five prior instances of the CAPE ratio exceeding 30 were eventually followed by declines of 20% to 89% in major Wall Street indexes, with the 21 months above 40 during the dot-com bubble presaging a 49% S&P 500 drop and 78% Nasdaq plunge.
Why it matters: The Shiller P/E at near-dot-com levels combined with the historically poor Q2 of midterm years—the only quarter with a negative average S&P 500 return since 1950—creates a convergence the article says makes the end of the Trump bull market likely. For retirement savers exposed to index funds, the historical record shows bull markets that delivered 70%+ S&P 500 gains don't end gracefully.
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