The US stock market, long hailed as the unbeatable champion of global finance, is having a bit of an identity crisis in 2026. While the rest of the world parties like it’s 1999 (returns-wise), American stocks are nursing a 1% loss year-to-date, marking their worst start against global peers since 1995, according to Goldman Sachs data.
Meanwhile, the ACWX index tracking international markets has surged 8% in the same period, leaving Wall Street looking like the kid who showed up to the reunion in last decade’s fashions.
Investors are quietly shifting their affection overseas. The past year tells a similar story: international stocks have delivered 30% gains, triple the US’s modest 10%. It’s enough to make even the most patriotic portfolio manager wonder if the grass really is greener—or at least cheaper—beyond American borders.
The numbers paint a picture of a market that’s become its own parody. US stocks keep getting pricier even as they lag. Price-to-earnings ratios sit about 40% higher than the rest of the world, a premium once justified by superior growth but now looking more like an overenthusiastic tip jar.
Blame the concentration. The top 10 companies in the S&P 500—including the familiar “Magnificent Seven” plus a few tag-alongs—now command 40% of the index, double the weight from a decade ago. It’s like betting the farm on a handful of tech darlings and hoping AI never has a bad hair day.
Goldman Sachs notes the market trades above 20x P/E even without those giants, a level that historically raises eyebrows.
Meanwhile, international markets arrived at 2025 undervalued and promptly overdelivered. Emerging markets rebounded, Europe steadied, and suddenly the world looked like the place to be. Geopolitical risks? They’re increasingly homegrown, from tariff talk to headline-grabbing ideas that make investors reach for the antacids.
Capital is voting with its feet. After years of M&A flowing into the US, 2025 flipped the script with net outflows—American companies buying abroad more than foreigners bought here. Global ownership of US equities has flatlined after two decades of steady climbs, not an exodus, but certainly a polite pause at the buffet.
Strategists caution that valuations alone don’t time markets, but when trends shift with fundamental support, the moves can get dramatic. For now, the US market appears high-priced, top-heavy, and a tad vulnerable—while international peers look like the underdog that just won the lottery.
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