After a remarkable period of leading global stock market performance, the U.S. equity market is facing challenges in 2025. Analysts are noting a significant shift, with many international markets delivering better returns than their U.S. counterparts.
Benedek Vörös from S&P Dow Jones Indices highlighted this trend, stating, “Impressive as YTD U.S. equity returns are, many international equity markets have outpaced the U.S. this year.” He pointed to the S&P World ex-U.S. Index, which has surged by 22%, noting that a substantial 71% of the non-U.S. stocks within this index are currently outperforming the U.S. segment of the global benchmark.
The underperformance of the S&P 500 is particularly pronounced against this backdrop, as various stock market exchange-traded funds (ETFs) from different countries have surpassed U.S. market returns since President Trump’s inauguration on January 20. This trend continued following the market lows in April 2025, which coincided with the onset of significant tariffs introduced by the administration. Analysts from Bespoke Investment Group confirmed that, on both accounts, international markets have outperformed the U.S.
For investors heavily weighted in U.S. equities, particularly through S&P 500 index funds, this shift can be a cause for concern. However, some analysts express a more measured view, suggesting that there is no need for alarm despite the underperformance. They argue that market cycles are natural, and fluctuations in global equity performance are expected.
As the year continues, investors will be watching closely to see if the U.S. stock market can regain its footing or if the trend in favor of international markets will persist.
