As of March 31, 2025, global stock markets have experienced notable shifts. In the first quarter, U.S. stocks underperformed compared to international markets, marking a significant turnaround from their strong performance in late 2024. The S&P 500 lagged global stocks by nearly 11 percentage points, the largest margin since 1987.
This underperformance is partly due to economic uncertainties stemming from the Trump administration’s trade policies, forecasts of slower U.S. economic growth, and rising inflation. In contrast, European stocks have gained traction, driven by new spending plans and potential economic rejuvenation.
In the U.S., the technology sector, particularly the “Magnificent Seven” companies—Apple, Microsoft, Alphabet (Google), Amazon, Nvidia, Meta Platforms (Facebook), and Tesla—has faced challenges. These companies have collectively lost nearly $2 trillion in market value, underperforming Chinese tech firms and European defense companies.
Conversely, Canadian and Mexican stocks have outperformed U.S. stocks in 2025, despite tariff hikes imposed by President Donald Trump. Investors remain optimistic that these tariffs might not fully materialize or will be short-lived.
Looking ahead, Goldman Sachs suggests that U.S. stock market exceptionalism may persist, citing higher investment growth and returns on investment for U.S. companies compared to their international counterparts.
In summary, while U.S. stocks have faced challenges recently, international markets, particularly in Europe and emerging economies, have shown resilience. Investors are advised to stay informed about global economic policies and market trends to navigate the evolving investment landscape effectively.