Key Points
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President Trump made the bold claim on Truth Social that the Dow would double by the time he leaves office.
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While Dow 100,000 probably isn’t in our immediate future, Trump has shown an ability to move the markets with what he says and does.
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Even if the market doesn’t double in the next few years, his policy decisions could keep stocks moving higher.
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This past Sunday, President Donald Trump took to his Truth Social platform to make a rather bold prediction. After hitting 50,000 for the first time last week, he thinks the Dow Jones Industrial Average (DJINDICES: ^DJI) will hit 100,000 by the end of his term.
Record Stock Market, and National Security, driven by our Great TARIFFS. I am predicting 100,000 on the DOW by the end of my Term. REMEMBER, TRUMP WAS RIGHT ABOUT EVERYTHING! I hope the United States Supreme Court is watching.
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Donald Trump, Truth Social
On the surface, his comments could be taken as just more of his typical bluster. After all, following three consecutive years of roughly 13% returns for the index, calling for an average annual return of around 26% over the next three years seems awfully optimistic.
But remember, this is a guy who has the ability to move markets with his comments and his policy decisions.
Image source: Getty Images.
A few recent examples of Trump moving the market
Liberation Day tariffs: One of the first things Trump did at the beginning of his second term was announce his intention to apply reciprocal tariffs on trade partners. Realizing the impact of a protracted trade war, the Dow fell about 16%, but the S&P 500 (SNPINDEX: ^GSPC) and the Nasdaq-100 fell more.
Liberation Day trade deals: After Liberation Day, Trump quickly announced that a number of countries had come to him proposing new trade deals and signaled a willingness to roll back some of the tariffs as they negotiated. Stocks quickly began rallying, and the Dow was at a new high a few months later.
No military action on Greenland: Trump’s desire to take control of Greenland raised geopolitical tensions. It didn’t trigger a correction-level pullback, but it damaged short-term sentiment. After Trump said he wouldn’t take aggressive action at the World Economic Forum in Davos, stocks rose around 1%.
American Eagle ad controversy: The polarizing Sydney Sweeney ad campaign drew a lot of public attention, but also that of Trump. After he publicly endorsed the campaign on social media, the stock rose by around 24% on August 4th.
Many of the Trump-triggered market moves, however, are more short-term in nature and surround specific events or issues. It’ll likely take much more to move the financial markets significantly higher over a multiyear period.
The best precedent for this might be the Tax Cuts & Jobs Act of 2017. That included cuts to corporate and individual tax rates, a higher standard deduction, and a higher child tax credit. While stocks chopped sideways after it went into effect, the optimism around it helped push the Dow sharply higher in 2017.
Potential catalysts that Trump might use this time around
Lower interest rates: The Federal Reserve, as it stands, seems hesitant to push rates much lower now, but Trump is very interested in lowering rates significantly.
Tariff stimulus checks: These have been floated for a while, and it’s unclear if they’ll ever come to fruition. Stimulus checks during the COVID pandemic were one of the factors that helped the S&P 500 rebound higher.
Mortgage-backed securities purchases: The idea of loading up the Fed’s balance sheet again with asset purchases isn’t ideal, but it’s another form of added liquidity that has traditionally helped with asset prices.
It seems unlikely that Trump will be able to push the Dow to 100,000 in the next three years, but the idea of him taking measures that would support higher stock prices shouldn’t be discounted. Trump has a way of moving the markets in his favor.
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David Dierking has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.