The S&P 500 outlook has gained a fresh political risk as President Donald Trump’s approval rating fell to 33%, the lowest level of his current presidency, in a Reuters/Ipsos poll completed August 17. The drop comes as the U.S.-Iran conflict keeps global oil supplies under pressure, gasoline costs elevated and long-term Treasury yields near multi-decade highs—turning what looks like a Washington polling story into a potentially important Wall Street signal.
The poll found 64% of Americans disapprove of Trump’s performance. More ominously for markets and Republicans heading toward the November 3 midterm elections, voters now give Democrats a small advantage on handling the economy, traditionally one of the GOP’s strongest issues.
For investors, the critical question is not whether a single approval poll can move stocks. It is whether weakening public support pushes the White House toward policy changes—or escalation—that affect oil prices, inflation, interest rates, trade and fiscal policy.
Trump Approval Rating Hits 33% as Iran War Bites
The Reuters/Ipsos survey was conducted from August 14 through August 17 using Ipsos’ probability-based KnowledgePanel. It included a nationally representative sample of 1,166 U.S. adults.
Only 33% approved of Trump’s job performance, down from 35% in a Reuters/Ipsos survey completed earlier in August. That matches the lowest approval rating Reuters/Ipsos recorded during Trump’s first presidency, reached in December 2017.
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The deterioration has been substantial since Trump returned to the White House in January 2025, when Reuters reported approval near 47%. By late April 2026, approval had already fallen to 34%, with economic dissatisfaction and the Iran conflict weighing heavily on sentiment.
Another major survey has shown a similar direction.
Pew Research Center reported in May that Trump’s approval had fallen to 34%, its lowest reading for his second term in that organization’s polling at the time, versus 46% the previous summer. Different polling methodologies mean individual numbers should not be treated as directly interchangeable, but the broader downward trend is difficult to dismiss.
Why the S&P 500 Outlook Is Connected to Trump’s Poll Numbers
Wall Street rarely prices presidential approval ratings directly. Markets care about what those numbers could cause politicians to do.
Trump’s problem is particularly market-sensitive because the biggest drag on his standing is intertwined with energy prices, inflation and the U.S. conflict with Iran.
About 80% of Americans in the latest Reuters/Ipsos survey said they expect U.S. involvement in Iran to continue for an extended period. Only 16% believed it was likely to end within a few weeks, while just roughly one in five respondents said the conflict had been worth it.
Those numbers create a difficult political incentive structure.
If falling approval increases pressure on the administration to secure an agreement with Iran, a reduction in geopolitical risk could potentially push crude prices lower and improve the inflation outlook. That would generally be constructive for equities and rate-sensitive growth stocks.
But if political pressure instead produces further military escalation, the effect could run in the opposite direction.
That second scenario is exactly what markets were worrying about on August 18.
Oil Above $90 Is the Market’s Immediate Warning Sign
Brent crude traded around $91 a barrel on Tuesday, near a three-week high, as hopes for a lasting U.S.-Iran agreement faded. Iran signaled a more aggressive military posture after negotiations stalled, while Washington declined to extend a temporary ceasefire arrangement that expired August 17.
The Strait of Hormuz remains central to the risk.
Disruption to traffic through the vital Gulf shipping route has already restricted global energy flows, and Reuters reported that the conflict has effectively disrupted a major share of global oil trade.
That has direct political consequences because higher crude eventually reaches American households through gasoline and other energy costs.
It also has direct financial consequences.
Higher energy prices can lift headline inflation, squeeze household disposable income, increase transportation and manufacturing expenses, and reduce profit margins for companies unable to pass higher costs to customers.
The Federal Reserve acknowledged that dynamic in its July 2026 Monetary Policy Report. The Fed said inflation had moved notably higher after energy prices surged following the outbreak of the Middle East conflict, while tariffs had already pushed up prices for some imported consumer goods.
That combination—oil plus tariffs—is particularly uncomfortable for the stock market.
Treasury Yields Are Flashing Another Warning
Equities are not the only market feeling the pressure.
The U.S. 30-year Treasury yield climbed above 5.3% on August 18, reaching its highest level since 2007, as investors reacted to rising oil prices, inflation concerns and persistent fiscal worries.
The bond selloff matters enormously for the S&P 500 outlook.
Higher Treasury yields increase the discount rate applied to future corporate earnings. That can put particular pressure on richly valued technology and artificial-intelligence stocks, where investors are paying today for profits expected many years into the future.
Long-term yields also affect mortgage rates, corporate borrowing, infrastructure financing and government debt-service costs.
Reuters reported that U.S. equity futures weakened Tuesday as higher oil prices and bond yields pressured risk appetite. Technology names were especially exposed to fears that financing conditions could stay tighter for longer.
The SPDR S&P 500 ETF Trust was trading around $772.67 in early U.S. trading, down roughly 0.5% from its previous close. The iShares 20+ Year Treasury Bond ETF was down about 0.8%, consistent with the latest jump in long-duration yields.
Those moves cannot be attributed solely to Trump’s approval numbers. The Iran standoff, oil prices, bond-market concerns and incoming economic data are far more immediate trading catalysts.
But they explain why the political slump matters.
The Economy Is Becoming a Dangerous Issue for Republicans
Perhaps the most financially important part of the poll is buried below the headline approval number.
Registered voters now give Democrats a 38%-35% advantage when asked which party has the better approach to the economy, according to Reuters/Ipsos.
Earlier in August, Democrats had edged ahead 37%-36% on the economy—the first Democratic advantage in Reuters/Ipsos polling on that question in roughly a decade.
The latest numbers suggest that shift away from Trump has not disappeared.
That matters because Republicans are trying to defend narrow congressional majorities in the November midterms. A change in congressional control could alter expectations for taxes, spending, deregulation, healthcare policy, energy policy and future extensions or modifications of Trump’s legislative agenda.
Markets may therefore become increasingly sensitive to generic congressional polling as November approaches.
A divided government can sometimes reduce the probability of large legislative changes, which some investors view positively. But a shift in congressional control can also generate uncertainty around fiscal negotiations, debt-ceiling battles, investigations and regulatory priorities.
Trump’s Immigration Advantage Has Nearly Vanished
Another striking shift involves immigration.
Republicans still hold a small advantage, with 40% of registered voters saying the GOP has the better approach compared with 38% for Democrats. Yet Reuters reported that Republicans’ advantage was 26 percentage points in January 2025.
That collapse does not have an obvious one-day impact on stock prices.
It could, however, matter to sectors highly exposed to immigration policy and labor availability, including agriculture, construction, hospitality, food processing and certain service industries.
A stronger Democratic showing in November could alter expectations around enforcement, work authorization and border policy.
For equity analysts, this is where political polling becomes sector analysis.
The Dollar Could Become Part of the Story
The dollar has also been showing signs of vulnerability.
Reuters reported August 18 that the U.S. currency remained near multi-month lows as softer economic data reduced expectations for additional Federal Reserve tightening. Geopolitical uncertainty provided some safe-haven demand, but monetary-policy expectations remained a major force.
A weaker dollar can create winners and losers inside the S&P 500.
Large multinational companies can benefit when overseas earnings translate into more dollars, while businesses reliant on imported goods may face higher costs.
Political uncertainty can amplify those moves if investors begin changing expectations for tariffs, deficits or the independence and direction of monetary policy.
Again, approval ratings themselves are not the trade. The policy response to those ratings is.
Could Falling Poll Numbers Push Trump Toward a Deal?
Investors now face a political game theory problem.
Trump campaigned on reducing inflation and avoiding prolonged wars, according to Reuters. Yet the Iran conflict has become closely associated with higher gasoline prices and mounting voter anxiety.
That gives the administration a potentially strong incentive to reduce energy costs before the November election.
A credible diplomatic breakthrough that allows significantly more oil to move through the Strait of Hormuz could reduce the geopolitical premium embedded in crude. Falling oil would likely ease inflation fears and could relieve some pressure on long-term bond yields.
That scenario would potentially favor consumer stocks, transportation companies and long-duration technology shares.
But negotiations remain deeply uncertain.
On August 18, Reuters reported that the temporary ceasefire had expired without a broader deal and both Washington and Tehran were again threatening escalation.
That makes an immediate bullish political pivot impossible to assume.
Stock Market Outlook: What Investors Should Watch Next
The S&P 500 outlook now sits at the intersection of politics, oil and interest rates.
First, watch Brent crude. A sustained move materially above $90 could reinforce inflation worries and squeeze consumers just as Republicans try to regain credibility on the cost of living.
Second, watch long-term Treasury yields. A 30-year yield above 5.3% represents a much more challenging valuation environment than investors enjoyed during the low-rate era.
Third, monitor upcoming Reuters/Ipsos and other high-quality polls for confirmation. One 33% reading has a margin of sampling error of roughly three percentage points, so investors should focus on the trend rather than treating 33% as an exact measure of national sentiment.
Finally, watch the November 3 midterms.
If Trump’s approval remains near record lows while Democrats maintain their newfound advantage on the economy, markets could start pricing a greater probability of congressional power shifting.
For Wall Street, that is when a bad poll can become much more than political theater.
The next major market shock may not come from the 33% approval number itself—it could come from what Trump does to try to reverse it.
