Some market analysts believe the S&P 500 would need to decline by at least 10% to trigger the so-called ‘Trump put.’
The recent dip in the U.S. stock market has been relatively mild, with the S&P 500 still hovering just 3% below its record closing high from last week. However, this hasn’t stopped speculation on Wall Street about whether the Trump administration might intervene if the selloff gains momentum.
Bank of America strategist Michael Hartnett recently shared his view on Bloomberg TV, suggesting the administration would likely act “if things go haywire.” He speculated that action might be taken if the S&P 500 falls to around 5,600 or 5,700, either through fiscal policy or by easing the Department of Government Efficiency (DOGE) spending cuts.
The concept of the ‘Trump put’ stems from the belief that Trump views the stock market as a measure of his administration’s success. This idea parallels the earlier ‘Fed put,’ where investors believed the Federal Reserve would step in to curb excessive market volatility.
During his first term, Trump frequently highlighted stock market gains as proof of his policies’ effectiveness. However, the administration’s response to market turbulence was mixed. In late 2018, amid a nearly 20% market drop fueled by the trade war with China and Fed rate hikes, Trump’s team attempted to calm investors with limited success. The COVID-19 market crash in 2020, on the other hand, prompted aggressive fiscal stimulus and Federal Reserve actions, helping stocks rebound quickly.
Whether the administration would act to stabilize markets this time remains uncertain. Some experts believe Trump’s current focus on spending cuts and trade tariffs might make him more tolerant of market volatility. Recent comments by Trump and his administration suggest that economic pain from tariffs and budget cuts could be seen as necessary sacrifices.
Interestingly, there’s also speculation that Trump’s new ‘put’ might apply more to bonds than stocks. Treasury Secretary Scott Bessent and Elon Musk, a special government employee, have emphasized the administration’s commitment to reducing the U.S. budget deficit — a move that could bolster demand for bonds. Musk recently remarked that betting against bonds could be a losing trade.
While the idea of a ‘Trump put’ remains speculative, some analysts argue that any significant market downturn could attract buyers without the need for government intervention. With the S&P 500 potentially needing to fall 10% or more to prompt action, investors will be closely watching both market moves and the administration’s next steps.
