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Markets

President Donald Trump Is the Catalyst Behind This $7 Trillion Investment That's Fueled Wall Street's Bull Market (Hint: It's Not AI)

May 02, 2026 — 08:26 am EDT

Written by

Sean Williams for

The Motley Fool->

Key Points

- The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite have generated outsize returns under President Trump.

- The Tax Cuts and Jobs Act, passed during Trump's first term in office, slashed the peak marginal corporate income tax rate to 21% -- its lowest level since 1939 -- and fueled share buybacks.

- However, this $7 trillion investment may have met its match.

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In case you haven't noticed, the bulls have ruled the roost on Wall Street for years. Aside from the five-week COVID-19 crash in February-March 2020 and the nine-month bear market in 2022, the time-honored Dow Jones Industrial Average (DJINDICES: ^DJI), benchmark S&P 500 (SNPINDEX: ^GSPC), and innovation-inspired Nasdaq Composite (NASDAQINDEX: ^IXIC) have rallied with consistency since President Donald Trump took office for his first, non-consecutive term in January 2017.

During Trump's first term, the Dow, S&P 500, and Nasdaq gained 57%, 70%, and 142%, respectively. This has been followed by double-digit gains across all three indexes since his second term began on Jan. 20, 2025.

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While most investors would attribute these outsize returns to the rise of artificial intelligence (AI), there's an even larger investment, spurred by President Trump, responsible for sending the Dow, S&P 500, and Nasdaq Composite to new heights.

President Trump delivering remarks. Image source: Official White House Photo by Joyce N. Boghosian, courtesy of the National Archives.

Donald Trump's flagship tax and spending law has fueled share buybacks

Over the last year, investors have paid close attention to Trump's tariff and trade policy, the implications of the Iran war, and the ramifications of the "Big, Beautiful Bill" becoming law. While the Big, Beautiful Bill is still fresh in everyone's mind, it's the president's flagship tax and spending law from his first term that really sparked Wall Street's bull market rally.

The Tax Cuts and Jobs Act (TCJA), signed into law by President Trump in December 2017, completely changed the game for corporate America. It permanently lowered the peak marginal corporate income tax rate from 35% to 21% (the lowest since 1939).

In lowering the corporate income tax rate, Trump hoped to light a fire beneath the U.S. economy. A lower corporate income tax rate would allow businesses to retain more of their earnings, which could then be used to boost hiring, facilitate acquisitions, and promote innovation.

But the TCJA led to another type of boom: share buybacks.

S&P 500 buybacks were $249.0b in 3Q25, up 6.2% from 2Q25 and up 9.9% from 3Q24; top 20 S&P 500 companies accounted for 49.5% of 3Q25 share repurchases, down from 51.3% in 2Q25

⁦@SPDJIndices⁩ pic.twitter.com/dwa0aikdw2

-- Liz Ann Sonders (@LizAnnSonders) December 19, 2025

Between 2011 and 2017, S&P 500 companies repurchased between $413 billion and $592 billion of their stock annually. When the TCJA went into effect, the impact on share buybacks was night and day:

- 2018: $840 billion in S&P 500 buybacks

- 2019: $749 billion

- 2020: $538 billion

- 2021: $919 billion

- 2022: $950 billion

- 2023: $815 billion

- 2024: $943 billion

- 2025: $1.2 trillion (est.)

Collectively, S&P 500 companies have invested almost $7 trillion to repurchase their own shares since the start of 2018. This is based on a record estimate of $1.2 trillion in buybacks last year, according to research from The Motley Fool.

For companies with steady or growing net income and a declining outstanding share count, a steady diet of buybacks can increase earnings per share (EPS). Apple (NASDAQ: AAPL), for instance, has spent $841 billion to retire more than 44% of its outstanding shares since the beginning of 2013. Buybacks can amplify EPS growth and make a company's shares more fundamentally attractive to value-seeking investors.

Additionally, buybacks can incrementally increase ownership stakes for long-term investors. This is what prompted now-retired CEO Warren Buffett to deploy $78 billion for share repurchases at Berkshire Hathaway from July 2018 to June 2024.

Image source: Getty Images.

Trump's $7 trillion investment may have met its historical match

There's