President Donald Trump inherited a robust stock market when he began his second term in January 2025, and then watched the markets tumble when he unveiled his sweeping tariff program. By the end of the year, however, the major stock exchanges were hovering near all-time highs — partly because the tariff threats were later walked back considerably.
What potential stock market changes can we expect in the second year of Trump’s second term? Here’s a look at three key areas that could have a major impact on the stock market.
Trump has made no secret of his desire to have the Federal Reserve keep lowering interest rates, and he has often been critical of Fed Chairman Jerome Powell for not moving aggressively enough.
Now the battle between the Trump administration and the central bank has been amped up following the news that Justice Department prosecutors have opened a criminal investigation into Powell.
The investigation centers on Powell’s 2025 congressional testimony regarding the Fed’s $2.5 billion renovation of its headquarters, CNN reported. However, some observers see the investigation as a way to replace Powell with another Fed chair who’ll lower rates to Trump’s liking.
The U.S. stock markets initially sank on the news, Reuters reported. But they later recovered — partly because nobody is sure how the Powell investigation will ultimately play out.
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The Trump administration has openly stated that it aims to exert more control on this side of the world. To that end, the White House recently ordered the U.S. military to invade Venezuela, capture Nicolás Maduro and bring him back to the United States to face drug trafficking charges.
But those charges were quickly overshadowed when Trump said the U.S. plans to take control of Venezuela’s vast oil reserves. Those plans include structured sales of barrels previously blockaded, according to StockCharts.
As StockCharts noted, Trump “publicly urged” major U.S. oil suppliers, such as Chevron, ExxonMobil and ConocoPhillips, to invest up to $100 billion of their own capital to rebuild Venezuela’s oil infrastructure.
Normally when this kind of event happens, it rattles the stock markets. But that wasn’t the case following the Venezuela invasion. Instead, the markets rose to new highs, led by gains in the oil/energy, defense and artificial intelligence sectors.
But the excitement over Venezuela’s oil might be premature. While it has the largest oil reserves in the world, the country currently produces less than 1% of global supply, according to Scott Galloway, an entrepreneur, author and NYU business professor.
“Oil infrastructure in the country has collapsed, and much of its heavy crude requires extensive refining,” Galloway wrote in a newsletter shared with GOBankingRates.
Meanwhile, Galloway also noted that the Venezuela invasion was part of a “broader vision” of American power, dubbed the “Donroe Doctrine.” That’s a reference to the 19th-century Monroe Doctrine, in which President James Monroe declared that the Western Hemisphere was “America’s sphere of influence.”
Since the Venezuela invasion, Trump has also hinted at possible actions involving Greenland and Colombia.
Trump and his team have made tariffs a cornerstone of their economic policy, with the dual aim of bringing more parity to global trade and more manufacturing back to the United States.
But investors get nervous whenever a major tariff is announced — especially against key trading partners like China, Canada and Mexico. The stock markets tanked when the initial tariff plans were announced last April. They reversed course only after Trump softened some of his harsher tariff threats.
The full effect of the tariffs hasn’t been seen yet because many companies accelerated their shipments before tariffs increased, Charles Schwab noted in an October report. That will likely change as the full impact starts hitting imports and exports.
The wild card is how long the tariffs will last. As The Motley Fool reported, the U.S. Supreme Court will decide whether Trump even has the authority to issue tariffs. The decision could have a major impact on the stock markets.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: Trump 2026: Stock Market Changes To Expect in Trump’s Second Year of His Second Term