US Stocks See Aggressive Dip-Buying on Trump Policy Volatility; Analysts Warn of Risks

A pattern of rapid, aggressive dip-buying is supporting US equity markets following sell-offs triggered by former President Donald Trump's policy threats, according to a Business Insider analysis. The strategy, dubbed the "TACO trade," bets on Trump quickly walking back statements after market turmoil. The S&P 500 has risen the day after each of its last five 2%+ single-day declines, a sharp reversal from 2024 when it fell the next day three out of four times. Retail investors are a major force, with JPMorgan noting three major 2025 dip-buying episodes accounted for 75% of the cohort's annual stock positioning. The concern is that if markets assume a TACO-trade rebound is guaranteed, the sell-off needed to prompt a Trump reversal may shrink, potentially leading to more aggressive policy threats to provoke a sharper decline.