US and global equity markets have reversed roles in 2025, with the global equity markets outpacing the US in the first quarter by more than 10 percentage points, according to new insights from Morningstar Indexes.
After a year of US equity market exceptionalism in 2024, with the Morningstar US Market Index rising more than 24% as compared to a 5.7% rise for the Morningstar Global Markets ex-US Index, non-US equity markets have set the pace in 2025.
Looking more closely at the underlying indexes, Morningstar Indexes attributes the underperformance of US equities in 2025 to the financial services and consumer cyclical sectors—in particular, the poor performance of US-based stocks like Tesla, Apple, and Alphabet, which represent a significant percentage of the Morningstar US Market Index. This is a reversal from market performance in 2024, when the strong performance of US-based technology stocks, like NVIDIA and Amazon, boosted US equity markets.
Alex Bryan, CFA – Director of Equity Products, Morningstar Indexes
“We’ve certainly seen a marked shift in 2025, with US equity investors growing increasingly uneasy amid the uncertain policy landscape, the growing impact of tariffs, and the prospect of an escalating trade war. With this recent underperformance and uncertainty facing US companies, it may be tempting to underweight US equities. While it’s unclear whether this trend will persist, the changing tides of equity markets in 2025 and market-specific policy risks help reinforce the value of global market diversification.”
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