A wild quarter for US stocks sends investors abroad

Subscribe to enjoy similar stories. Investors entered 2025 riding U.S. stocks to records.

Three months later, the American market’s decline has pushed them overseas. The Trump administration’s whipsaw rollout of a tariff fight with America’s biggest trading partners has analysts trimming forecasts for economic growth and lifting estimates for inflation. The tech trade that carried indexes to new highs is fizzling.

Investors big and small have been shifting bets to Europe—where new spending plans could jolt a lethargic economy—and beyond. “For the first time in a while, you can have a conversation about: Might European equities be the best place to be for the next two or three years?" said John Porter, chief investment officer at Newton Investment Management, which has been buying European stocks in many of its strategies in recent months. “You can have that conversation for reasons other than they’re cheap." The S&P 500 is struggling to claw its way out of a correction after falling 10% from its February record.

The tumultuous quarter has left the U.S. stock benchmark down 5.1%, far behind the gains of indexes overseas. The dollar has weakened, leaving investors wondering if the pullback from investing in U.S.

assets heralds the start of a long-term regime. It is a far cry from the end of 2024, when the S&P 500 capped a second consecutive year of more than 20% gains. Cooling inflation had allowed the Federal Reserve to lower interest rates three times in a row.

Election Day victories by President Trump and congressional Republicans seemed to presage tax cuts, deregulation and boom times ahead. Few money managers are ready to proclaim an age of European dominance. But some are considering the possibility that years of