The US stock market has risen in 2025 and isn’t far from its all-time high set last week. But it’s climbed less than stock indexes in Mexico City, Paris and Hong Kong.
When it comes to stock markets around the world, this year has clearly not been “America First”.
The difference in performance has been so stark than an index of stocks from 22 of 23 developed economies around the world, excluding the United States, has trounced the S&P 500: a 7.5% rise through Monday versus 1.7% for Wall Street’s benchmark.
The split in performance has many causes and, if it continues, it would mark a sharp reversal following years of US exceptionalism.
Signs of strain for the US markets?
The US stock market has been the clear winner for so long among global markets in large part because the US economy’s growth has been so much stronger and more stable than nearly anywhere else.
But the steep divide means many other stock markets now don’t look as pricey as Wall Street, where critics say prices for many stocks rose too quickly relative to their companies’ admittedly booming profits.
And the Big Tech stocks that have accounted for more and more of the US stock market as they kept soaring, look particularly expensive to some.
Investors consider whether new strategies are required
Morgan Stanley strategist Michael Wilson said many of his clients in recent weeks have been asking if they should be focusing more outside the United States.
That includes tech stocks from China, where an upstart called DeepSeek rocked the artificial-intelligence industry by saying it had developed a large language model that could compete with big US rivals but at a much lower cost.
Central banks in other countries also seem much more willing to cut interest rates, a move that often tends to boost stock prices there. The European Central Bank eased rates in January, for example.
A day later, the Federal Reserve in Washington said it would hold rates steady, and minutes from that meeting indicate US policy makers may not move rates for a while given worries about how President Donald Trump’s tariffs and other policies could keep upward pressure on inflation.
Dollar rise helps other currencies
The rise in the US dollar’s value against other currencies has also helped big exporters from other countries. Some big US companies, meanwhile, have already begun cutting their forecasts for upcoming profits in part because of the bite that a stronger dollar will take from their results.
At Amazon, shifting currency values erased about $900m (€858.79) of its revenue during the latest quarter, which totalled $187.8 billion (€179.2bn) for example.
The tech giant said the pain is likely to continue, and it forecasted an “unusually large, unfavourable impact” of approximately $2.1 billion (€2bn) for its revenue in the current quarter from currency shifts.
Professional investors have noticed. It’s still popular among global fund managers to bet on Apple, Nvidia and the other five Big Tech US stocks that make up the group known as the “Magnificent Seven”.
But the recent outperformance for stocks outside the United States may show a “peak in investor conviction of US exceptionalism”, Bank of America strategist Michael Hartnett wrote in a recent BofA Global Research report.
