Stocks Are Grinding Lower and Gapping Higher Under Trump

The market moves triggered by President Donald Trump’s foreign policy pronouncements are helping to shake up a long-established pattern in equities.

Traders are used to stock markets grinding higher during bull-runs, which are typically interspersed with sharp gaps lower during bouts of weak sentiment. But the combination of Trump’s turbulent second term and a 2022-style markets playbook threatens to trigger more episodes where that sequence gets flipped on its head.

For example, Wednesday’s jump in the S&P 500 Index following news of a ceasefire meant that registered realized volatility on up days has surpassed down days since the first ...