Good morning! With the first quarter of 2025 in the books, overseas stocks have crushed those in the US. Today we unpack why, and what comes next. Was this email forwarded to you? Join 190,000 self-directed investors gaining an edge every morning. Sign up here. 

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Testing US exceptionalism

It took just three months for 2025 to remind investors that markets don’t move in straight lines. 

When President Trump secured his second term in November, Wall Street had convinced itself it had every reason to triple-down on US equities. The S&P 500 was wrapping off back-to-back years of 20% gains, inflation was cooling, and the “American exceptionalism” play looked like the latest boon to the AI trade. 

That script unraveled fast.

The S&P 500 and Nasdaq Composite just notched their worst quarters since 2022. What’s more, US stocks lagged their international peers by their biggest margin in nearly three decades, according to Dow Jones market data.  

“The ‘America First’ agenda has actually placed Europe first this year when it comes to relative stock market performance,” said veteran economist David Rosenberg, adding that US stocks have seen $5 trillion in value wiped out since early February. 

Indeed, the unwind has been swift and jarring.

Tariff uncertainty — which may clear up as soon as Wednesday with Trump’s “Liberation Day” — combined with a cooling AI trade has left some investors wondering what exactly made US markets so compelling in the first place. 

Magnificent Seven titans like Nvidia, Apple and Microsoft, once untouchable, have seen significant pullbacks.

Meanwhile, the US dollar has weakened en route to its worst start to a year since 2017, an additional hit on foreign investors who’d gone unhedged.

It’s also the first time since 2018 that US stocks and the greenback have fallen in tandem, according to FactSet.

In short, pain is compounding, and it’s pushing capital to alternative options overseas. 

Europe’s benchmark STOXX 600 index gained 5.18% in the first quarter, marking record outperformance against the S&P 500 in dollar terms, Bloomberg data shows.

Similarly, Germany’s DAX index has climbed 11.3% to start the year. 

It wouldn't be the first time when the rest of the world outpaced Wall Street — savvy investors will remember the early 2000s when Europe did the same briefly after the dot-com bubble burst.

Still, context matters. US markets have more than earned their reputation.

Excluding dividends, the S&P 500 has climbed roughly 370% over the last 20 years versus the 65% returns of a benchmark global index that excludes US equities, the MSCI ACWI ex-US ETF.

One quarter doesn’t erase two decades of dominance, though some investors would argue today that early seeds of doubt have arrived. 

Trump’s “Liberation Day” threatens to further cloud the economic picture. Analysts are already trimming their growth and earnings forecasts.

In the first quarter, 64% of S&P 500 companies issued negative earnings guidance, higher than the 5-year average of 57%, FactSet data shows. 

That said, American markets are never short of reasons for optimism. 

• US businesses are expected to post stronger earnings growth than their international peers this year

• April is historically the second-best month of the year for US stocks

• Any degree of tariff clarity from Trump could be reason to rally

Any one of those three catalysts could be enough to reassert market leadership, though each one hinges largely on what the White House announces Wednesday.  

For now, investors are navigating a different market than they imagined at the start of the year. 

American exceptionalism is facing a test. And this time, the rest of the world seems to have the answers. 

Market snapshot

Elsewhere:

📨 BlackRock CEO Larry Fink published his annual letter. He used the moment to reassure investors that market jitters and tariff uncertainty will pass. In the 27-page memo, he never explicitly mentioned Trump, instead opting to focus on the long-term outlook and his firm’s ability to “figure things out.” Read the full letter.

🚀 NewsMax stock spiked 700% for its IPO. The cable news channel began trading on the New York Stock Exchange Monday, opening at $14 a share before rallying big. The debut comes as the audience for conservative media content has grown with Trump’s second term. (CNBC)

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Rapid-fire:

• OpenAI closed a $40 billion funding round, the largest private tech deal ever (CNBC)

• Rocket Companies will acquire rival Mr. Cooper in a deal valued at $9.4 billion to create a lending behemoth that handles one in every six US mortgages (Bloomberg)

• Two of Trump’s sons will lead a business venture to invest in American Bitcoin, a new mining company controlled by Hut 8 (WSJ)

• Gold just had its best quarterly performance in nearly four decades (Yahoo Finance)

• Celsius Holdings jumped more than 6% after Truist upgraded the stock for its ability to “corner” the women’s market (CNBC)

• Traders are treating Trump’s “Liberation Day” like a Fed decision (Opening Bell Daily)

• Anthony Pompliano remains bullish on DeFi Technologies, which just announced record annual results (Pomp Letter)

Last thing:

About me:

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day, unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else. Feedback? Reply to this email, ping me on X @philrosenn, or write me directly at phil@openingbellmedia.com.