During his first term in the White House, President Donald Trump was laser-focused on the booming stock market. Even the most pedestrian market milestones were celebrated. And if investors didn’t seem to like Trump’s policies, he’d back down. The script has been flipped during Trump 2.0. Post-election gains have faded fast. US stocks have tumbled. And confidence in Trump’s economic agenda has crumbled while frustration over trade war chaos has mounted.

"The market is giving a thumbs down to Trump’s policies. It’s not obvious at all to investors that all of this will be followed by a golden age," said Ed Yardeni, a Wall Street veteran and president of Yardeni Research. Yet Trump has, so far at least, not backed down. His quest to surge tariffs higher remains on track, as does his plan to slash government spending and lay off federal workers en masse. Trump officials have mostly shrugged off the lightning-fast 10% correction in the S&P 500. Investors have come to an alarming realization: This time, Trump may have a much greater tolerance for market pain.

"Trump doesn’t seem to care what the stock market is doing," Yardeni said, adding that this is a problem for investors who have realized Trump may not be bluffing on tariffs after all. During Trump 1.0, investors assumed there was a "Trump Put"—the idea that if markets dropped below a certain level, the White House would reverse course to bring stocks back up. The potential for a policy change would limit market losses. "Today, there is no Trump Put. Quite the opposite: It looks like Trump’s policies are potentially weakening the economy," Yardeni said.

The Changing Market Dynamics

The Federal Reserve last week dimmed its 2025 growth forecast for the economy, warning of higher inflation and a weaker jobs market. Keith Lerner, chief market strategist at Truist Advisory Services, said investors are uncertain about the current Trump agenda of very high tariffs, deregulation, and low oil prices. "There is an experiment happening. And we don’t have confidence in how this is going to play out," Lerner said.

Of course, presidents should not take all their cues from the market. What’s good for Wall Street is not always good for Main Street. Besides, the stock market is notoriously fickle. All too often, investors focus on short-term gains while ignoring longer-term issues. (See: Any time the market sells off on a strong jobs report or vice versa.) Moreover, the overwhelming majority of stocks are held by affluent households, which means a skyrocketing stock market could exacerbate wealth inequality.

The Trump Administration's Perspective

Trump officials have framed the market stress as short-term pain versus long-term gains. "I’m not worried about the markets. Over the long term, if we put good tax policy in place, deregulation, and energy security, the markets will do great," Treasury Secretary Scott Bessent told NBC News’ "Meet the Press" this month. Bessent even described stock market corrections as "healthy" and "normal"—especially compared with "straight up." And that’s largely true. Market corrections do happen from time to time. And it is better to allow overheated markets to cool off over time rather than crash.

The Stark Contrast Between Terms

Consider the stark contrast between Trump 1.0 versus 2.0. Markets surged after Trump won in November 2016, and that rally continued as he focused mostly on pro-business issues at first. Tariffs didn’t arrive until 2018, after Trump had already enacted massive corporate tax cuts. The S&P 500 didn’t suffer a significant losing month until February 2018. During his second term, Trump has so far focused on slashing government spending, mass deportations, and huge tariffs that Federal Reserve officials say will likely worsen inflation. Investors fear those import taxes will keep interest rates high for longer, chill business spending, and dent profits.

The S&P 500 is on pace in March to suffer its third losing month in the past four. Tax cuts may happen—but not yet. First comes Liberation Day. That’s the nickname Trump has given to April 2, the day he’s promised to go forward with his plan for reciprocal tariffs on US trading partners. Uncertainty is very high about exactly what that looks like—and that uncertainty is feeding volatility into markets. Trump told reporters on Friday there will be "flexibility" on reciprocal tariffs, without elaborating what that means in practice.

"Calling it Liberation Day does not give me a warm and fuzzy feeling," Yardeni said. Some investors fear Trump is not hearing the message they’re sending. And that could exacerbate the market response. In the 1990s, Yardeni coined the phrase "bond vigilantes" to refer to bond market investors who protested bad policy out of Washington by dumping US debt. Now, Yardeni sees a similar situation playing out, but in the stock market. "If stock market vigilantes today feel their warnings are not being listened to that these policies could cause a recession, you might see an even bigger selloff as they try to get the attention of Washington," Yardeni said. It’s akin to a toddler who only screams louder after failing to get his way during a temper tantrum.

The Potential Economic Impact

Of course, this kind of a temper tantrum could have a real economic impact. The more markets tumble, the greater the chance businesses and consumers—especially high-income households—slow spending, hurting corporate profits and sending stocks further down. But Trump officials have shown a "willingness to stomach rockiness in the stock market," said Lerner, the Truist strategist. "Everyone is trying to figure out: At what point do they care?" Lerner said.

Navigating the Market's Message

The current economic landscape under President Trump is marked by significant uncertainty and market volatility. While the administration remains focused on its agenda of tariffs, deregulation, and government spending cuts, investors are grappling with the potential long-term impacts of these policies. The absence of a "Trump Put" has left investors without a safety net, leading to increased anxiety and market instability.

As the administration moves forward with its plans, the key will be balancing economic ambitions with market realities. The Federal Reserve's cautious approach and the administration's willingness to tolerate short-term market pain suggest a long-term strategy. However, the market's message is clear: Investors are concerned, and the administration must be prepared to address these concerns to avoid further economic turmoil.