Experts Warn of Looming Stock Market Crash Under Trump

Historically high valuations and rising inflation could force the Federal Reserve's hand, threatening a market downturn.

Apr. 11, 2026 at 8:06am

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An extreme close-up of heavy, industrial banking equipment and machinery in muted shades of grey and blue, conveying a sense of institutional power and financial security as a metaphor for the potential market downturn.The looming threat of a stock market crash casts a shadow over the Trump presidency's economic legacy.Cleveland Today

Analysts are growing increasingly concerned that the combination of an overvalued stock market and surging inflation could lead to a significant market crash during President Trump's second term. The closure of the Strait of Hormuz and resulting spike in oil prices have pushed inflation to levels not seen in years, potentially forcing the Federal Reserve to reverse course on its dovish policies and raise interest rates, which could undermine the long-running bull market.

Why it matters

A major market correction or crash would have far-reaching implications for the economy, consumer confidence, and the political landscape. It could threaten the prosperity that has defined Trump's presidency so far and become a central issue in the next election.

The details

The S&P 500's Shiller Price-to-Earnings (P/E) Ratio has risen above 40, a level only seen twice before - both times followed by significant market declines. The closure of the Strait of Hormuz, which disrupted 20% of global oil supply, has sent crude prices skyrocketing and pushed inflation to 3.25%, well above the Federal Reserve's 2% target. This could force the Fed to raise interest rates, which would undermine the factors that have propelled the market's historic run under Trump.

  • The Strait of Hormuz was closed on February 28, 2026, disrupting global oil supply.
  • The Federal Reserve's March 2026 inflation report showed a jump from 2.4% to 3.25%.
  • The S&P 500's Shiller P/E ratio has been above 40 since the start of 2026.

The players

Donald Trump

The 46th President of the United States, whose first term saw the stock market soar but whose second term may be threatened by a potential market crash.

Jerome Powell

The Chair of the Federal Reserve, who may be forced to raise interest rates in response to surging inflation, potentially triggering a market downturn.

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What they’re saying

“While nothing can be answered with concrete certainty, one catalyst strongly suggests the likelihood of an elevator-down move for stocks has notably increased.”

— Sean Williams, Author

What’s next

The Federal Reserve's next policy decision in April will be closely watched for any signs that it is preparing to raise interest rates in response to high inflation.

The takeaway

A market crash under Trump's presidency could undermine the economic prosperity that has defined his time in office so far, with potentially significant political consequences. Investors may want to brace for increased volatility in the coming months.