Trump's 100 Days: A Volatile Start, But Markets Hold Their Ground?

The first 100 days of Donald Trump’s second administration in 2025 were marked by bold executive actions, judicial clashes, and a whirlwind of policy reversals. From immigration crackdowns to a trade war with China, the administration’s agenda sent shockwaves through markets—yet investors have so far avoided panic. This analysis explores the economic and geopolitical risks introduced by Trump’s policies and weighs whether markets can sustain resilience amid growing uncertainty.

Policy Overreach Meets Market Resilience

The administration’s aggressive stance on immigration—such as mandating English proficiency for truck drivers and targeting “sanctuary cities”—sparked legal battles but had limited direct economic impact. More concerning were the trade wars with China, where Trump’s 145% tariff threats triggered a $2.5 trillion market selloff in global equities. However, markets rebounded after the tariffs were delayed for 90 days, highlighting investor patience for policy reversals.

The S&P 500 ended Q1 2025 down just 2% from December 2024 highs—a modest decline given the geopolitical chaos. This resilience suggests investors are pricing in short-term volatility while awaiting clarity on trade negotiations.

The Fed’s Delicate Balancing Act

Trump’s public clashes with Federal Reserve Chair Jerome Powell—calling him a “loser” for resisting rate cuts—have raised fears of monetary policy politicization. The Fed’s response has been cautious: it paused rate cuts despite revised GDP forecasts of just 0.5% for 2025, citing tariff-driven inflation risks.

The Fed’s reluctance to ease monetary policy has kept bond yields elevated, with the 10-year Treasury yield hovering near 4.1%—a level that constrains housing markets and corporate borrowing.

Sector Winners and Losers

The tech sector, particularly the so-called “Mag 7” giants (Apple, Amazon, etc.), faced significant headwinds. Their outsized weighting in the S&P 500 amplified market volatility, as investors questioned their ability to sustain growth amid slowing consumer spending.

Tesla, for instance, saw its valuation drop 25% in early 2025 as rising interest rates and supply chain disruptions from tariffs dented demand. Meanwhile, sectors like utilities and real estate—seen as defensive plays—gained traction, with the S&P 500 Utilities Index rising 8% year-to-date.

The Immigration Policy Paradox

While immigration enforcement dominated headlines, its economic impact remains mixed. Deportations of U.S. citizens (e.g., the case of Kilmar Ábrego García) drew condemnation, but labor markets have stayed resilient, with unemployment holding near 4.1%. However, the administration’s threats to freeze Harvard’s federal funding—a $2.2 billion blow—highlight risks to higher education and institutional autonomy, potentially stifling long-term innovation.

Trade Wars: A Double-Edged Sword

The trade war with China has been a litmus test for global supply chains. While U.S. stocks briefly rallied on tariff delays, the 125% tariffs maintained on Chinese imports keep inflationary pressures alive. The Fed’s March Summary of Economic Projections (SEP) now anticipates core inflation of 2.8% in 2025, up from earlier estimates—a direct consequence of trade tensions.

Conclusion: Navigating the Crosswinds

Trump’s first 100 days have been a masterclass in policy unpredictability, yet markets have shown surprising resilience. Key takeaways:
- Volatility is the new normal: Investors must brace for swings tied to tariff deadlines, Supreme Court rulings, and Fed policy shifts.
- Tech remains vulnerable: The Mag 7’s dominance in indices amplifies sector-specific risks, requiring diversification into utilities and real assets.
- Inflation is sticky: Tariffs and geopolitical tensions ensure the Fed will remain cautious, limiting rate cuts until 2025’s fourth quarter.

The data tells the story: while the S&P 500 has held up, the broader economy faces a 10% chance of recession and a 2.5% GDP growth ceiling. For now, markets are betting on policy reversals and Fed flexibility—until the next shock.

As investors say: Buy the dip, but keep an umbrella.

Risks Ahead: A failure to resolve trade disputes by mid-year could push the S&P 500 into bear territory. Meanwhile, the Fed’s independence remains under threat—a risk no valuation model can easily price. Stay vigilant.