The "Don't Fight Trump" Trade Is Working: S&P 500 Ignores Everything and Keeps Surging

SPY has continued rising regardless of negative headlines since Election Day 2024, with the S&P 500 up about 30% over roughly 18 months. The move has occurred while CPI increased from 315.493 in November 2024 to 333.020 in April 2026, keeping inflation elevated. Equities have benefited because they represent claims on nominal cash flows, which can perform well when prices rise as long as corporate margins remain intact. Margins have held, supported by record-high money market balances, a measured pace of Treasury debt terming out, and an AI capital expenditure cycle that pulled forward about a trillion dollars of spending into two years. This spending concentrates on a small number of very large companies, driving index gains even when broader participation is weaker.

"Since Election Day 2024, the index is up 30%, a run that has absorbed a shooting war with Iran, a tariff regime that rewrites itself by tweet, and an inflation print that refuses to behave. The bumper sticker version, popular on trading desks from Greenwich to Greenwich Avenue, is "don't fight Trump." The honest version is more interesting. The market has decided that none of the things keeping cable news producers employed actually matter to corporate earnings, and so far the market has been right."

"A roughly 30% move in 18 months on a $50-plus trillion index ranks, in dollar terms, as one of the largest wealth creation events in American history, and it has happened while the Consumer Price Index climbed from 315.493 in November 2024 to 333.020 in April 2026. Inflation has stayed elevated while equities outran it. Equities, being claims on nominal cash flows, do fine when prices rise, so long as corporate margins hold. And margins have held."

"Money market balances remain parked near record highs, the Treasury has been terming out debt at a measured pace, and the AI capital expenditure cycle has pulled forward something like a trillion dollars of data center, power, and chip spending into a two-year window. That spending lands on the income statements of a small number of very large companies, which is why the index keeps grinding higher even when the median stock does not. The breadth problem is real, but it has been real for the entire move, and shorting narrow leadership has historically been a fast way to lose money in a bull market driven by genuine earnings growth at the top of the index."

Read at 24/7 Wall St.