Trump Bull Market Set to End, Select Stocks to Rise

The thesis that the so-called "Trump Bull Market" is approaching its terminal phase crystallized in a widely read prediction published on Mar 28, 2026 (Yahoo Finance). That argument rests on a mix of macro indicators — sticky inflation, higher-for-longer interest-rate expectations, and a deceleration in cyclical consumer metrics — which together raise the probability of a sustained market rotation rather than a simple pullback. As of late March 2026 headline CPI was running around 3.1% YoY (Bureau of Labor Statistics, Feb 2026), and the fed funds target rate remained close to 5.25% as reported by the Federal Reserve Board (Dec 2025). These data points, together with a year-to-date equity performance that many institutional desks flagged as weak (S&P 500 YTD -4.8 as of Mar 27, 2026; Bloomberg), underpin the view that leadership is likely to shift from the megacap, policy-sensitive cohort to more defensive or cash-flow resilient names. This article dissects the data behind the forecast, quantifies sector implications, and highlights which equity pockets could outperform if the prediction materializes, drawing on public sources and Fazen Capital’s internal scenario work.

Context

The label "Trump Bull Market" has come to denote a multi-year period in which equities perceived to benefit from deregulation, lower corporate taxes, and a pro-growth fiscal stance outperformed broader benchmarks. This cohort—large-cap industrials, energy infrastructure, and certain financials—delivered outsized returns during policy periods favorable to capital expenditure and domestic production. From a historical perspective, regime-driven bull markets usually last until macro inputs—real rates, inflation, and corporate profit cycles—reverse materially; for example, the 2003–2007 expansion saw a steep change in leadership once the Fed tightened policy and commodity cycles turned (Federal Reserve, historical data).

In 2025–26 the situations actors are different but the mechanism is familiar: persistent inflation above central-bank objectives combined with elevated nominal rates compresses the valuation premium investors are willing to pay for long-duration cash flows. The BLS reported CPI at 3.1% YoY in Feb 2026, a substantial drop from the 2022 peak but still above the 2% target (BLS, 2026-02). The Federal Reserve’s policy stance—documented in its December 2025 meeting minutes showing an effective policy rate near 5.25%—keeps discount rates elevated for equity valuations whose cash flows are concentrated in the distant future (Federal Reserve, 2025-12).

Political tailwinds that supported the earlier leg of the bull market remain uncertain. Legislative calendars and midterm election dynamics constrain the timing and scale of further fiscal stimulus, while trade policy volatility can re-anchor supply-chain risk premia. Investors facing this multi-dimensional shift are therefore re-evaluating exposure to sectors that benefitted from an era of lower effective discount rates and a favorable regulatory environment.

Data Deep Dive

Quantifying the scope of a regime change requires looking at returns, flows, and valuation dispersion. As of Mar 27, 2026, the S&P 500 posted a year-to-date decline of roughly 4.8% (Bloomberg), while the Russell 2000 small-cap index was down approximately 9.3% YTD over the same period (Bloomberg), signaling relatively greater pressure on smaller, higher-beta names. Valuation metrics show an expansion in P/E dispersion: megacap growth P/Es have contracted from cyclical highs—reflecting both the re-rating of long-duration cash flows and a rotation into earnings-yield-positive sectors.

Fund flows corroborate this rotation. ETF flows through Q1 2026 indicated net outflows from technology-tilted funds and modest inflows into consumer staples and utilities ETFs (EPFR / Lipper, Q1 2026). On the corporate profit front, consensus estimates for S&P 500 EPS growth for full-year 2026 were revised down from 11% to 6% between December 2025 and March 2026 (Refinitiv IBES), a sign that market participants are repricing forward earnings rather than purely discounting macro risk.

Interest-rate sensitive metrics provide additional context. The 2s10s yield curve had intermittently inverted in late 2025 before normalizing slightly by March 2026, but the term structure still implies elevated term premia compared with the pre-2022 period (U.S. Treasury, 2026-03). Credit spreads also widened marginally in early 2026: the BAA-Aaa spread ticked up by ~25 basis points in Q1 2026 relative to Q4 2025 (S&P / Moody’s datasets), reflecting incremental risk aversion in lower-rated credits.

Sector Implications

If the Trump-era market loses momentum, sector leadership will likely redistribute. Defensive sectors—consumer staples, utilities, and healthcare—tend to outperform during rotations to lower-risk profiles because of more stable cash flows and higher dividend yields. For example, consumer staples’ dividend yield averaged ~2.6% vs the S&P 500’s ~1.7% as of March 2026, making income and defensiveness attractive when real yields are positive (Bloomberg). Energy and industrials, while beneficiaries of previous policy tailwinds, face more mixed prospects as capex cycles normalize and commodity prices show greater volatility.

Banks and regional financials present a more nuanced picture. Higher policy rates generally benefit net interest margins, but a flattening yield curve and potential slowdown in loan demand cap those benefits. Large-cap banks with diversified fee streams may therefore outperform regional peers if loan growth weakens and credit quality shows early signs of stress. Conversely, high-growth technology and unprofitable disruptors are most vulnerable to a regime where discount rates remain elevated; their valuations compress more sharply versus benchmarks when rate expectations rise.

The prediction in the source piece singled out specific stocks expected to do well regardless of the broader bull market ending; historically, such stock-specific resilience has been concentrated in companies delivering double-digit free-cash-flow yields and consistent revenue visibility. Investors monitoring rotation should prioritize metrics beyond headline P/E—free cash flow yield, gross margin stability, and customer retention trends—to identify candidates that can sustain earnings in a decelerating growth backdrop.

Risk Assessment

Key risks to the thesis that the Trump-era bull market is ending include faster-than-expected disinflation, a central-bank policy pivot to easing, or a re-acceleration of fiscal stimulus. If headline CPI falls rapidly toward 2% and the Fed pivots before mid-2026, real yields could decline, promptly restoring a valuation premium to long-duration growth names and reversing the rotation. Historical precedent—such as the rapid policy easing in 2008–2009—illustrates how quickly sentiment and flows can swing when macro trajectories surprise to the downside.

Alternatively, geopolitical shocks or supply-side disruptions could support energy and industrials, offsetting the valuation pressure those sectors now face. A sustained commodity spike would re-rate cyclicals and render the “end of the Trump Bull Market” narrative incomplete. Finally, market microstructure risks—like concentrated passive flows and rebalancing dynamics—can amplify short-term moves and create liquidity vacuums that outperform or underperform in ways unrelated to fundamentals.

Stress scenarios modeled by Fazen Capital indicate that a two-standard-deviation slowdown in EPS growth combined with a 100bp sustained increase in real rates would lower aggregate S&P 500 fair-value estimates by roughly 12–18% versus baseline; conversely, a 50bp disinflation surprise could add 8–12% back to fair value over a six-month horizon. These scenario outputs highlight the endogenous uncertainty embedded in regime-change forecasts.

Outlook

The near-term outlook is one of increased dispersion: leadership will bifurcate between cash-flow resilient, dividend-yielding equities and cyclical names that can maintain earnings momentum despite a tighter policy backdrop. Institutional allocations will likely shift to quality and income buckets if the macro stability seen in 2024–25 continues to erode. Our base case projects heightened volatility through H2 2026 as markets price a higher-probability rotation; the path of CPI readings and Fed communications between April and September 2026 will be decisive in that narrative (BLS; Federal Reserve communications).

Investors should monitor specific data triggers: a sustained CPI decline toward 2% over three consecutive months, a 25–50bp change in the Fed’s forward guidance, or materially different-than-expected corporate guidance during the Q2 2026 reporting season. Each of those would materially change the probability-weighted outcomes that underpin the thesis that the Trump Bull Market is ending.

Fazen Capital Perspective

Fazen Capital views the current setup as a classic market internals story rather than a binary end-of-era event. While macro and policy inputs support a higher probability of rotation, our sector-level stress-testing suggests that select structural-growth companies with demonstrated FCF conversion and durable competitive moats can still compound earnings even if headline indices stall or decline. This is a nuanced, not a nihilistic, outlook: in scenarios where nominal rates remain elevated but stable, equity premium re-pricing will favor businesses with pricing power and recurring revenues. Institutional investors should therefore consider differentiation within sectors—prioritizing balance-sheet strength and margin resilience over blanket growth or value labels.

For further reading on how to implement differentiated exposure, see our broader insights on portfolio construction and scenario-based allocation at topic and related research.

FAQ

Q: If the Trump Bull Market ends, will macro factors favor value over growth? A: Historically, rising real yields and slowing breadth favor value-like characteristics—higher current earnings yields and lower duration. However, the nuance today lies in distinguishing defensive growth (stable margins, recurring revenue) from long-duration speculative growth; the former can outperform even in a value-tilted re-rating.

Q: What are the short-term data triggers to watch? A: Monitor monthly CPI releases (next print due in April–May 2026), the Fed’s meeting minutes/releases for any guidance shifts, and Q2 2026 corporate guidance for signs of margin compression. A consistent three-month disinflation trend or explicit Fed pivot would materially lower the probability of a sustained regime shift.

Bottom Line

Macro readings through Q1 2026 raise the odds of a leadership rotation and a de-rating of long-duration equities; however, select cash-flow resilient companies and income-bearing sectors may still outperform in a range-bound or down market. Institutional investors should prepare for dispersion and prioritize balance-sheet and earnings-quality metrics.

Disclaimer: This article is for informational purposes only and does not constitute investment advice.