For just the second time in a decade, the S&P 500, one of America’s most representative stock indexes, is set to relinquish its position as the top-performing stock index globally. A deeper examination reveals that the S&P’s performance has been dismal in comparison to its international counterparts, ranking 41st among more than 60 global stock indexes, according to an NBC News analysis. The index has registered annual returns of only 16%, positioning it well below the top 20, 30, or even 40 performing indexes worldwide.
Despite the underwhelming annual returns, the companies comprising the S&P 500 have significantly outperformed others globally in terms of value creation, amassing more than $7.7 trillion in market value—surpassing the annual economic output of every nation except the U.S. and China. The U.S. remains the leading destination for publicly traded companies, with over 5,400 companies listed on the New York Stock Exchange and Nasdaq combined.
However, the S&P’s relative underperformance this year marks a considerable deviation from historical trends. Even the most optimistic projections for the index’s future suggest it will only align with the performance of various international markets by the end of 2025. When matched against the MSCI All Country World Excluding U.S. Index—tracking 46 countries—the S&P 500 currently trails by more than 10%. This stark contrast illustrates that the S&P is on track for a second year of underperformance in the last decade, the last instance being in 2017.
The underlying factors contributing to this underperformance include ongoing trade uncertainties, which have persisted since President Donald Trump resumed office in early 2025. His inconsistent tariff policies have led global investors to consider more stable markets outside the U.S. Additionally, the nation’s escalating debt, the weakening dollar, and attacks on the Federal Reserve’s independence have raised red flags for investors.
Following Trump’s re-election, markets initially surged, reaching record highs. However, as concerns over his tariff strategies mounted, a market downturn ensued, wiping out approximately $5.8 trillion in S&P 500 value. A subsequent pause on his global tariff rollout led to a market rebound, with the S&P recording its third-largest single-day gain in history.
As the Supreme Court deliberates over the future of Trump’s tariff programs, the potential for refunds of tariffs paid could compel the Treasury Department to issue new debt, further pressuring yields. While uncertainty surrounding tariffs persists, the burgeoning artificial intelligence (AI) sector has injected some optimism into the markets. Significant investments in AI have proliferated, boosting the valuations of leading companies like Nvidia, Apple, Amazon, and Alphabet, with the U.S. now hosting nine firms valued at over $1 trillion.
Yet, a broader analysis of the S&P indicates a split in performance, with major tech firms projected to report nearly 15% earnings growth in the upcoming quarter, while the remainder of the 493 companies within the index are expected to see growth of only 6.7%. This discrepancy has been encapsulated as the economy operating at “two speeds,” with AI and tech sectors flourishing as other areas falter.
Currently, South Korea’s Kospi index leads globally, boasting nearly 70% returns this year. The growth has been driven by a resurgence in semiconductor demand and a strong technological sector. Following South Korea, indexes from countries such as Kenya, Nigeria, and Chile round out the top 10.
The gap between the U.S. and other global indexes has been exacerbated by a weakened dollar, which has risen the relative values of foreign investments as the Dollar Index has fallen by 9% since the start of 2025. This decline makes imports more expensive for American consumers and businesses.
European Central Bank President Christine Lagarde has indicated that the dollar’s allure may be diminishing, emphasizing the need for the U.S. to maintain its geopolitical credibility and strong institutions to safeguard its longstanding currency dominance. Conversely, Goldman Sachs CEO David Solomon acknowledges the dollar’s resilience but advises vigilance toward potential shifts in its status.
As the economic landscape shifts, the S&P 500’s struggle for relevance in a rapidly evolving global marketplace continues to garner attention and concern among investors.
