4 charts that show Wall Street's shaky start to 2025 — and how global markets are catching fire
It appears investors were wrong about US President Donald Trump's second term in office.
Instead of the Trump trade boosting markets, his fast-changing economic and trade policies have sent US stock markets tanking since the January inauguration.
It doesn't help that Trump and his officials have signaled a higher tolerance for market volatility than during his first term. Investors are scrambling for cover and boosting stock markets elsewhere in the world.
The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average have all retreated this year — a stark contrast to stock markets in Europe and Asia.
The Euro Stoxx 50 index, Germany's DAX index, and Britain's FTSE 100 have all advanced with gains boosted by a massive defense and government spending plan from Germany and other European countries.
Asia is up, too. Hong Kong's Hang Seng index has jumped 20% on the back of the hype in Chinese artificial intelligence fueled by DeepSeek's latest AI model and similar releases from local players.
This rotation marks a shift from the last decade of US equity outperformance compared to the rest of the world.
The rally in ex-US stocks isn't just about a rotation out of American assets due to Trump's policies. As Business Insider reported last summer, favorable economic conditions and cheap valuations in the rest of the world also play into the shift.
"The consensus wasn't only too bullish about the US, it was also too bearish" on the rest of the world, wrote Dario Perkins, an economist at GlobalData.TS Lombard , in a Monday note.
Tech stocks feature prominently in the US market rout.
The "Magnificent Seven" technology stocks in the US have been almost universally slammed by the market sell-off. Tesla has had a uniquely bad time with shares down about 41% as of Monday's close, in part because of concerns about Elon Musk's leadership. Meanwhile, Apple has slid about 15%, and Google-parent Alphabet has dropped more than 13%.
But in Europe, some major contractors are winning on the heels of massive government spending plans. Shares of German industrial giant Thyssenkrupp and defense contractor Rheinmetall have both doubled this year.
In Asia, AI hype has spurred a Chinese tech stock rebound from a yearslong slump prompted by a state-backed crackdown and economic downturn. Chinese leader Xi Jinping's personal endorsement of the private sector last month gave prices an extra push.