President Trump has predicted the stock market will double by the end of his second term, with the Dow Jones Industrial Average reaching 100,000 by January 2029. Three historical signals point the other way: a tariff record that has hurt company performance before, valuations near their priciest in 155 years, and margin debt at an all-time high.
Trump bets tariffs will double the market
According to a Truth Social post from February, Trump said he expects the stock market to double by the time he leaves office in January 2029, calling for the Dow Jones Industrial Average to reach 100,000 and citing "our great tariffs" as the catalyst. During his first term the Dow, S&P 500, and Nasdaq Composite gained 57%, 70%, and 142%. Since his second-term inauguration the three indices have rallied 24%, 29%, and 36%.
However, an analysis by four New York Federal Reserve economists found that tariffs hinder rather than help U.S. businesses. Examining Trump's first-term China tariffs from 2019 to 2021, the economists found declines in labor productivity, employment, sales, and profits at the affected companies.
A stock market already near its priciest in 155 years
The S&P 500's Shiller P/E ratio, which measures long-term valuation, has averaged 17.4 since 1871. In early June it peaked at 42.84, the second-highest reading during a continuous bull market spanning 155 years. Only six instances have seen the ratio top 30, and the previous five all ended in temporary disaster, with the Dow, S&P 500, or Nasdaq eventually falling 20% or considerably more.
Margin debt flashes a familiar warning
Investors have also taken outsize risks amid the historic bull market, using margin to buy securities. FINRA reported outstanding margin debt hit an all-time high of about $1.502 trillion in June, up 77% over 14 months. That marks only the fourth time in three decades that margin debt has jumped at least 65% in a short stretch, and the previous three instances preceded the dot-com bust, the Great Recession, and the 2022 bear market.
Historically speaking, the odds of the stock market doubling before the end of Trump's second term are practically zero.
Source: Fool
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