Stock Market’s Post-Election Shine Fades as Economic Concerns Creep In

The stock market’s shine in the wake of President Trump’s election fully wore off in late February, with the new administration’s early policy priorities and weak consumer sentiment making investors uneasy about the economy.

Stocks climbed to new highs in the immediate aftermath of Mr. Trump’s win, as traders geared up for lighter regulation and tax cuts — anticipating they would add up to accelerating growth. But that rally stalled in recent days as anxiety about the inflationary impact of new tariffs began to grow. A slump in technology stocks this week also weighed on the broad market.

By midday Friday, the S&P 500 — which touched a record as recently as Feb. 19 — was on track for its worst week of the year with a decline of about 2 percent. The index is down about 2.5 percent for the month, but it is still up slightly for the year.

The pullback was driven, in part, by renewed concerns about the inflationary effects of sweeping tariffs, which Mr. Trump has already imposed on China and has said he will broaden to Canada and Mexico next week. As recently as late 2024, investors had expected the Federal Reserve to cut interest rates several times this year, moves that would be positive for stocks and the economy, but that view has shifted quickly amid concerns that inflation will linger longer than expected. With rates set to remain elevated, worries have extended to the broader impact on the economy.

Recent economic surveys showing a sharp decline in consumer sentiment, in part because of pessimism about employment prospects, as well as expectations that prices could start to climb again, have fueled caution among investors too.

“The market had shown great enthusiasm around the election, and it was predicated on the likelihood of favorable taxation, of a lighter regulatory climate, and just general enthusiasm,” said Steve Sosnick, the chief strategist at Interactive Brokers. “The problem is, those expectations got a bit ahead of the reality.”

Here’s what else to know about the recent retreat: