Wall Street Thinks Trumpflation Has Peaked, but There's an Unpleasant Surprise Looming for President Trump and Investors
Yahoo Finance ·
Despite a wild ride in March, the first half of 2026 is shaping up as another stellar year for Wall Street. Through the closing bell on June 29, the Dow Jones Industrial Average ( ^DJI +1.14% ) , S&P 500 ( ^GSPC +0.00% ) , and Nasdaq Composite ( ^IXIC 0.80% ) have risen by 9%, 9%, and 11% year-to-date, respectively. Outsize stock market returns under President Donald Trump are nothing new . The Dow, S&P 500, and Nasdaq Composite returned 57%, 70%, and 142%, respectively, during his first non-consecutive term. Investors have embraced Trump's permanent lowering of the peak marginal corporate income tax rate and the subsequent increase in share buybacks by S&P 500 companies. But the stock market's historic rally may be far shakier than Wall Street's major indexes imply . Although recent record highs for the Dow, S&P 500, and Nasdaq suggest Wall Street is looking past the Trump-driven surge in inflation (i.e., "Trumpflation"), an unpleasant surprise awaits the president and investors. President Trump speaking with reporters. Image source: Official White House Photo by Patrick B. Ruddy. Before going any further, it's important to note that a modest level of inflation is perfectly normal and healthy. The Federal Open Market Committee (FOMC) -- the 12-person body responsible for setting the nation's monetary policy -- has maintained a long-term inflation target of 2% since January 2012. Businesses should have some degree of pricing power in an expanding economy.
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