President Trump has pledged to create an era of American exceptionalism with policies that put the United States first and ahead of other countries.
But Trump's moves in the early days of his administration had the opposite outcome for the American stock market.
For years, the S&P 500 has taken over major European and Chinese markets as investors begin to withdraw money from the US and make it happen all over the world.
Since Trump took office, the S&P 500 has dropped by 6%, Germany's DAX index has risen by 10%, and the European overall Stoxx 600 index has scored more than 4%. Other US indices are getting worse as European markets are supported by plans for military spending on the continent after Trump reveals he wants more to protect himself.
Hong Kong's Hang Seng index has risen further, rising more than 20% since Trump took office in January, pushing him to try and stimulate Beijing's economy. Mexico's IPC index is domestically focused and proves resilient to Trump's sudden tariffs, up 5%.
As the American market is lashed out by uncertainty about Trump's tariff policy and deep cuts to the federal government, investment advisors have begun steering clients into other stock markets around the world.
“We are committed to providing a range of services to our customers,” said Jitania Kandari, Associate Chief Investment Officer, Solutions and Multi Asset Group, Morgan Stanley Investment Management. She said she noticed an increase in conversations with clients considering increasing their international stock exposure.
Even the sluggish global market has managed to outperform the S&P 500. The FTSE Global Index has fallen 2.9% since the inauguration, and was overwhelmed by US listed stocks. Canada's TSX index fell by 2%. Japan's 225 fell by 3.6%.
Over the past few weeks, Wall Street has sent a ton of pivot-recommended bank research notes, client presentations and trade ideas from the US.
“Respect for resilience, fade our exceptionalism, and worry about policy shocks,” read the title of a presentation by Bruce Kassman, president of economics and global economic research at JP Morgan.
Brad Rutan, market strategist at MFS Investment Management, said he saw opportunities outside of the US. “It's safe to say that there's plenty of space for international stocks right now.”
Investors pulled money from the funds to buy US stocks for the first time this year, according to weekly data run by EPFR Global until Wednesday. The withdrawal totals $2.5 billion, which is compared to an influx of about $100 billion over the first nine weeks of 2025.
While some traders respond very quickly to new information in the market, other traders, especially those who expect to be invested for a long time, such as pension funds and university contributions, can take months to move their money.
“After such long outperformance in the US and Europe, these things cannot be changed to 180 degrees in a month,” said Greg Bootle, head of BNP Paribus' US Stock Manager Strategy. “There are probably a lot of investors who haven't been reassigned yet.”
As investors continue to withdraw money from US stocks and invest in foreign markets, it could add to the sales pressure that dragged the S&P 500 into the correction last week.
The US market is so large that it is almost impossible for foreign investors to leave the country fully, Kandari said.
The recent withdrawal comes after a year in which the US stock market is the global vy hope and attracts foreign investors looking for a higher return than the home market offers.
According to data from EPFR Global, about $420 trillion inflows in 2024 into funds to buy US stocks, lifting key indexes high, helping to grow a few major technology companies. Approximately two-thirds of the FTSE Global Index valuation comes from US stocks, and nine of the top 10 shares on the index are sold in sizes from the US.
In the year leading up to the presidential election, the S&P 500 surpassed many other indexes around the world, up 32%. Next was the German DAX, which increased by 27%.
Many investors remain bullish on US stocks in the long term, believing they will once again outweigh foreign stocks.
Europe could strengthen government spending and drive growth. But that boom can be driven not by sustainable economic strength, but by fear of war. And if the US enters a recession, the rest of the world is unlikely to survive fallout.
“In the end, I think all of this uncertainty has settled down, but I think there is still a US that has advantages that Europe and other countries have,” said Paul Christopher, head of global market strategy at the Wells Fargo Investment Institute.
Other investors wonder if the present moment is the beginning of an inflection point.
“I think there's that debate going on,” Kandari said.
