Wall Street Gains Under Trump: 57%, 70%, and 142% During His First Term

Wall Street posted strong first-term gains under Trump, with the Dow up 57%, the S&P 500 up 70%, and the Nasdaq up 142%. The article also highlights S&P 500 buybacks hitting an all-time high in 2025, supported by Trump-era corporate tax changes. Offsetting that bullish backdrop are major geopolitical and energy risks from the Iran conflict, which has shut the Strait of Hormuz, affecting 20 million barrels per day and driving gasoline prices higher at the fastest pace in over 30 years.

Analysis

The market’s real vulnerability is not valuation compression from rates alone; it is the interaction between fiscal stimulus optics and a sudden energy tax on consumers. A gasoline spike is a regressive shock that hits lower-income cohorts first, which means the pain will show up in retail spending, delinquencies, and small-ticket discretionary names well before headline CPI fully transmits. That creates a near-term window where “everything is fine” in index level terms while breadth quietly deteriorates beneath the surface.

The second-order winner is not just energy producers, but the whole complex of domestic substitutes and price pass-through businesses. Refiners, pipeline operators, and select chemicals should outperform upstream oil if the shock is driven by logistics disruption rather than a broad demand upcycle, while airlines, parcel/logistics, and autos face margin pressure from both fuel and weaker consumer demand. If the conflict persists into the summer driving season, the market will likely reprice inflation persistence rather than one-off headline inflation, which is more dangerous for multiples.

The buyback angle is a real equity bid, but it is also a signal of less productive capital deployment and higher index fragility. If buybacks are already at record levels, the marginal support from corporate demand is likely closer to saturation than the current tape implies; that leaves indices more exposed to a single macro shock than in prior cycles. In other words, the market has been rewarded for financial engineering and AI capex optionality, but neither offsets a sustained terms-of-trade hit to consumers if energy remains elevated for 1-3 months.

Consensus is likely underestimating how quickly a geopolitical energy shock can spill into domestic political risk and then into factor rotation. The trade is not simply long energy/short consumers; it is long inflation beneficiaries and quality balance-sheet defensives versus levered cyclicals with weak pricing power. If the conflict de-escalates quickly, the unwind in energy may be sharp, so timing matters more than direction.

Key Decisions for Investors

• Go long XLE vs. XLY on any 3-5% pullback in the next 1-2 weeks; risk/reward favors energy over discretionary if gasoline remains elevated for more than a few sessions.
• Initiate a tactical long XOP or XLE call spread expiring 6-10 weeks out to capture continued energy-volatility repricing while capping downside if diplomacy lowers crude quickly.
• Short JETS or AAL/UAL basket for 1-2 months as a hedge against persistent fuel-cost pressure and softer consumer demand; pair against XLE to isolate the fuel shock.
• Add a defensive quality pair: long PG or COST, short small-cap discretionary/retail (IWM consumer sub-basket) for 1-3 months, as lower-income spend pressure typically shows up first in essentials trade-down behavior.
• Avoid chasing index beta into the rally; if long SPY, hedge with short-term put spreads 5-8% out of the money because broad buyback support can mask deteriorating breadth until a geopolitical headline gap forces de-risking.