During Donald Trump’s first term, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite saw significant gains. In the first year of his second term, these indexes continued to rally. However, historical correlations suggest potential turbulence in the stock market for the new year. The stock market is currently at its second priciest valuation in history, with the Shiller Price-to-Earnings Ratio at 40.59. Past instances of a Shiller P/E above 30 have been followed by significant declines in the stock market. This, combined with historical correlations, raises concerns about a potential stock market crash in 2026.

Additionally, there is a historical correlation between Republican presidencies and recessions. Since 1913, Republican presidents have overseen recessions while in office. This, combined with President Trump’s tariff and trade policies, further increases the risk of stock market weakness in the new year. Despite these concerns, long-term investors should remain optimistic, as history shows that the stock market tends to rise over multi-decade periods. The key takeaway is that stock market cycles are not linear, and downturns are a normal part of market behavior.

In terms of investing, analysts have identified 10 stocks that could provide substantial returns in the coming years. While the S&P 500 Index wasn’t on the list, these recommended stocks have the potential for significant growth. The Motley Fool Stock Advisor’s total average return of 974% outperforms the S&P 500 by a large margin. Investors should consider these recommendations for potential long-term gains.

Read more at Nasdaq: How Likely Is It That the Stock Market Crashes Under President Donald Trump in 2026? Here’s What History Tells Us.