will Trump continue to rattle the stock market? hello, I'm Young Gon Lee, an analyst at Toshiba Securities. dear Readers, If you had to pick a major player to shake up the stock market this year, it would be Trump. but the stock market's reception of him could be very different in 2026. as the policies of the second year of the Trump administration begin to sink into the real economy, we need to separate the noise from the real opportunities. We'll break down why the market's reaction is changing and what specific investment strategies we should be building.
uS stock market outlook for 2026: why markets will be less surprised by Trump
if 2025 was the year of the Trump administration's policy announcements and the subsequent paroxysmal market correction, 2026 will be the year of settling in and consequences. Market experts define 2026 as a year of risk reboot, with a modest decline in inflation and less policy uncertainty. the micro-fundamentals of companies, rather than macroeconomic anxieties, will be the key drivers of stock prices.
learning and market resilience
while Trump's off-the-cuff remarks or hard-line policy stance itself won't change much, the impact on markets will likely be significantly less than in the past. This is because investors have become accustomed to his rhetoric. The market has already learned his unique pattern of rallying the troops with strong statements, followed by working negotiations to reach some compromise. For example, in April 2025, the tariff comments caused significant stock market volatility, but the market quickly regained its composure and began to focus on fundamental corporate earnings. in 2026, this learning effect will be even stronger, creating a more cautious atmosphere where markets will wait to see the pace and effectiveness of actual policy implementation, rather than plummeting at the sound of words.
beyond uncertainty, an era of instability
the markets of 2026 are characterized by the word instability rather than uncertainty. whereas uncertainty refers to the blindness of not knowing the future, instability refers to a state in which relationships between data fluctuate in real time, creating multi-layered paths. for example, tariff policies can put upward pressure on prices, but they also have the positive side effect of protecting domestic industries. with such a complex mix of variables, markets are unlikely to react as uniformly as they have in the past, so in 2026, it's essential to have an investment strategy that carefully weighs the long-term opportunities and risks of Trump's policy direction, rather than being swayed by his temporary wobbles.
key macroeconomic indicator forecasts for 2026
indicator: U.S. GDP growth 2026 forecast: 1.9% to 2.2% Key rationale: Increased infrastructure investment and AI-related capital spending
what: Consumer Price Index (CPI) 2026 forecast: 2.8% to 3.0% Key rationale: Residual upward pressure on import prices from tariffs
metric: S&P 500 target 2026: 7,500 to 7,800 Key rationale: Corporate profit growth and deregulatory effects
metric: Federal Funds Rate (expected) 2026 forecast: 3.0% to 3.25% Key rationale: Gradual rate normalization and inflationary response
key Trump policy beneficiaries: Companies with direct U.S. government stakes
one of the most unconventional moves of the Trump administration's second term is the government's direct equity investment in private companies, which is inherently different from past bailouts. it's part of an aggressive industrial policy that seeks both profitability and control in the name of national security and supply chain independence. by taking an equity stake instead of simply subsidizing the company, the government is able to exert direct influence over management and return future profits to the national treasury.
intel: More than just a semiconductor company, a national champion
the most prominent example is Intel. in August, the U.S. government invested a 9.9% stake in Intel, valued at about $8.9 billion. the announcement sent Intel's stock up more than 50% in the month following the announcement. The government's direct stake in Intel is a statement of intent to build the company into America's national semiconductor champion. in 2026, the key to the stock's future will be whether Intel's foundry business can deliver substantial volume production results in 18A and 14A processes. With the government as an ally, Intel now needs to prove its technical execution.
key mineral security: MP Materials, Lithium Americas, Trilogy Metals
government investment is rapidly expanding beyond semiconductors into key minerals. this is a move to reduce dependence on China and build self-reliant supply chains.
in the case of rare earths-related stock MP Materials, the US Department of Defense has thrown its support behind the company, taking a 15% stake and guaranteeing a price floor. this has led to a 125% surge in the stock price in one month. lithium-related stock Lithium Americas also saw a 210% increase in its share price following the Department of Energy's equity investment. trilogy Metals, a developer of copper and cobalt mines in Alaska, saw a phenomenal return of 410% on the news of the government's equity investment. These explosive share price gains show that the market recognizes direct government investment as a strong guarantee check.
major US Government Direct Equity Investments (2025-2026)
target company: Intel (INTC) Government ownership: 9.9% Purpose of investment: to promote semiconductor manufacturing independence and foundry development Stock price reaction: +50% in the month following the announcement
target company: MP Materials (MP) Government ownership: 15% Investment objective: Rare earth magnet production and diversification away from China Stock price reaction: +125% in one month after announcement
target company: lithium Americas (LAC) Government ownership: 5% Investment objective: Accelerate lithium projects in Nevada Stock price reaction: +210% in the month following the announcement
target company: trilogy Metals (TMQ) Government Ownership: 10% Investment Purpose: To support copper, cobalt, and germanium development Stock Price Reaction: +410% in the month following the announcement
the substance of the U.S. manufacturing resurgence: The magic of the OBBBA Act and tax incentives
no discussion of Trump policy beneficiaries would be complete without mentioning the strategy to revitalize American manufacturing. the Trump administration's America First mantra is reorienting global supply chains back to the U.S. It's doing so with a combination of aggressive tariff policies and generous tax incentives.
The OBBBA Act and increased investment tax credits
the OBBBA Act, also known as the Big, Beautiful Bill, is the key to the U.S. economy in 2026. It increases the Advanced Manufacturing Investment Tax Credit from 25% to 35% for companies breaking ground on new plants in the U.S. by 2026. this is a powerful incentive for companies to clean up their overseas production bases and return to the U.S. Companies in the semiconductor, battery, and electric vehicle sectors, in particular, are the direct beneficiaries of this tax incentive and are expected to continue their robust growth in 2026.
behind the manufacturing numbers and the opportunities
of course, we are also seeing a side effect of tariff policies, which is higher commodity prices and a temporary decline in manufacturing jobs. however, this should be interpreted as labor pains in the process of supply chain reorganization. by 2026, the disruptions will have subsided and we'll see real productivity gains as U.S.-built factories begin to come online. Smart factory stocks, especially those that combine automation and AI, are likely to benefit from this process. this is a time of not only quantitative expansion in manufacturing, but also a qualitative leap forward.
AI Infrastructure and Defense Stocks: Industries Turning Geopolitical Crisis into Opportunity
by 2026, AI will have moved beyond a technology buzzword and into a real infrastructure build-out, while the Trump administration's hard-line foreign policy is giving the defense and aerospace industries a new impetus for growth.
AI infrastructure beneficiaries and the evolution of the electric grid
AI models require massive amounts of power to learn and make inferences. electricity consumption in the U.S. is expected to reach a record high in 2026, driven by booming data center demand. as a result, transmission grid expansion and energy storage (ESS) companies are in the spotlight, especially in the small modular reactor (SMR) sector, where initial projects are expected to begin in 2026 with full government support. companies like NewScale Power and Oklo are building stable revenue models through long-term power purchase agreements with big tech companies.
u.S. defense stocks outlook and the commercialization of aerospace
geopolitical conflicts provide strong momentum for defense stocks. the Trump administration is pushing allies to increase their defense spending while pressuring them to buy American-made weapons systems. the five largest U.S. defense companies are expected to generate record levels of cash flow by the end of 2026. In addition, the aerospace industry is moving beyond government-driven exploration to accelerated commercial use. companies involved in low-orbit satellite communications and space security are likely to benefit in the long term as they align with government security strategies.
expected 2026 indicators by promising industry sector
industry Sector: Advanced Semiconductors Key Beneficiary Theme: Foundry Independence 2026 Goal: Intel 18A process begins volume production
industry Sector: Enterprise AI Key Benefit Theme: agentic AI systems 2026 Goal: 75% adoption of enterprise AI agents
industry Sector: Next Generation Nuclear Key Benefit Theme: Commercialize SMRs 2026 Goal: Initial projects, including new-scale power, begin construction
industry Sector: Strategic Minerals Key Benefit Theme: Localize rare earth magnets 2026 Goal: MP Materials' second magnet plant starts up
industry Sector: Defense & Space Key Benefit Theme: Autonomous Weapons and Low Earth Orbit Satellites 2026 Target: Top 5 defense companies reach FCF of $26 billion
trump risk investment strategy: 4 must-haves and a checklist
there could be more companies benefiting from the policy in the future. but not all companies will benefit. Here are four conditions readers should look for to ensure a successful investment in 2026.
1. highly relevant to strategic industries and security
industries that are directly tied to national security, such as semiconductors, critical minerals, and advanced materials, are protected by the government regardless of economic fluctuations. In these sectors, tariff barriers are a boon to domestic companies, as they increase their share.
2. is long-term growth evident
stocks driven by simple policy themes are risky. even without policy support, industries like AI, energy transition, and aerospace must be on an upward trend themselves. policy should act as an accelerator for growth, not the growth itself.
3. is there too much dependence on non-US countries
look for industries with weak supply chains in the U.S., especially in areas where competitor China dominates the market. The more dependent an industry is on China, such as rare earths or certain battery materials, the more likely it is to be targeted for government subsidies and tax incentives.
4. is there a direct link to the resurgence of U.S. manufacturing?
make sure the company is building or expanding a production base on U.S. soil. the Trump administration's benefits are centered on companies that make things on American soil. news of factory breaking ground or plans to invest in the U.S. will be the strongest catalysts for stock price gains.
dealing with global stock market volatility: A guide to diversifying your portfolio
while 2026 is a year of opportunity, it's also a year of volatility, so a portfolio that is lopsided could be dangerous. along with an aggressive asset allocation centered on U.S. stocks, you should combine strategies to help defend against volatility.
maintain a healthy allocation to cash and use sharp market corrections as bargain-basement buying opportunities. You also need the flexibility to adjust your allocation to export-oriented countries or industries that could be harmed by America First policies. we should also pay attention to the volatility in Treasury rates as a result of rising fiscal deficits, as political populism could intensify ahead of the 2026 midterm elections.
frequently asked questions (FAQs)
Q1. Will Trump's tariff policies really help the US economy? A1. While tariff policies can burden consumers by raising import prices, they are also intended to encourage overseas production facilities to return to the country to ensure long-term manufacturing competitiveness. in 2026, the positive and negative effects of these policies will collide, and the market will be in a state of flux.
Q2. Will companies with government equity always go up? A2. Government equity investment provides a strong vote of confidence, but it also carries risks of shareholder value dilution and political pressure. it's important to ensure that the company's technical execution and earnings growth are in place.
Q3. What is the single most promising sector for 2026? A4. AI infrastructure and core minerals are my top picks. these two sectors are at the intersection of U.S. national strategy and huge trends in industry, so they are the most likely to benefit from policy.
Q4. Will Korean companies be marginalized in Trump's second term? A4. No. Korean companies with plants in the U.S. or strategic partnerships with U.S. companies may actually see new opportunities as key partners in reshaping the U.S. supply chain.
Q5. How should individual investors react during volatility? A5. Rather than getting caught up in the noise of the market, double-check whether a stock meets your four investment criteria. if you have confidence in the long-term policy direction, a temporary correction can be an opportunity to overweight.
conclusion and summary
the U.S. stock market in 2026 will be about finding the real policy beneficiaries as the market gets used to the Trump administration. Keep an eye out for companies like Intel, key minerals companies, and those at the center of the U.S. manufacturing resurgence. We hope you'll use our four-point checklist to build your own solid portfolio.
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key one-line takeaway: 2026 is the time to stop freaking out over Trump's comments and start picking the real beneficiaries of government equity investments and manufacturing.