An Inflation Double Whammy Awaits Wall Street, Making a Stock Market Crash Likelier Under President Donald Trump
Yahoo Finance ·
From a purely statistically standpoint, outsize stock market gains have gone hand-in-hand with Donald Trump's presidency. Despite historic volatility during the early stages of the COVID-19 pandemic and, more recently, the tariff tantrum in April 2025, the Dow Jones Industrial Average ( ^DJI +0.46% ) , S&P 500 ( ^GSPC +0.05% ) , and Nasdaq Composite ( ^IXIC -0.64% ) have generated double-digit annualized returns with Trump in the White House. But history also makes it clear that bull markets aren't indefinite. While several catalysts threaten to weigh down the stock market, including otherworldly valuations and a parabolic move in outstanding margin debt, inflation is arguably the toughest to sweep under the rug. President Trump's policies are fueling inflation -- but they aren't the only issue. Image source: Official White House Photo by Molly Riley. Although the headline U.S. inflation rate has backed off from a three-year high, Wall Street isn't out of the woods . An inflation double whammy awaits equity markets in the second half of 2026, significantly increasing the likelihood of a stock market crash under President Trump. As recently as February, trailing 12-month (TTM) inflation was a modest 2.4% and moving closer to the Federal Reserve's long-term target of 2%. Though Trump's tariffs were modestly lifting prices in the goods sector in February (something now-former Fed Chair Jerome Powell regularly alluded to in Federal Open Market Committee (FOMC) statements), things appeared to be moving in the right direction.
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During Donald Trump's presidency, major indices such as the Dow Jones, S&P 500, and Nasdaq recorded double-digit annualized returns, but bubble concerns and a surge in margin debt persist. In particular, the dual hardship of re-accelerating inflation in the second half of 2026 increases the possibility of a stock market decline and shock. As inflation, which stood at 2.4% as of February, shows signs of rebounding due to tariff policies and other factors, investors need to exercise caution.
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- Stock Market — The risk of a stock market crash in the second half of 2026 is growing due to the Trump administration's tariff policies and the resurgence of inflation.
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