US VS International/US Sectors

Index	First Quarter 2025	Year          To-Date 2025
S&P 500	-4.6%	-4.6%
Dow Jones Industrial Average	-1.3%	-1.3%
Russell 2000	-9.8%	-9.8%
MSCI All Country World Index ex-US	6.3%	6.3%
Aggregate Bond	2.8%	2.8%

Performance Source: Koyfin.com Price Return

U.S. Versus International

The S&P 500 Index, an index of large U.S. companies, posted a price return of -4.6% for the First Quarter of 2025. Large U.S. stocks underperformed international for the quarter as measured by the iShares MSCI ACWI ex-US Index, a representation of international stocks outside the U.S. The International ETF return for the First Quarter of 2025 was 6.3%.

International stocks outperformed U.S. stocks by a large margin. According to Morningstar, this was the strongest outperformance by international stocks on record during a first quarter of a calendar year, according to Dow Jones Market Data going back to late 1987. This is largely seen as a “catch up trade”, as the S&P 500 has risen by 370% compared to less than 65% for the MSCI All Country World Index ex-U.S. ETF since March 2005. 

Spain, Columbia, Greece, Chili and Germany were among some of the top performing stock indices for the quarter. Some of these countries may be spared the highest tariffs. Germany rose on the prospect of higher government defense spending, which could drive production and growth.

U.S. Sectors

Top performing U.S. S&P 500 sectors as reported by Koyfin for the First Quarter of 2025 include Energy (10.0%), Health Care (6.6%) and Utilities (4.9%). Laggards for the First Quarter include Consumer Discretionary (-11.7%), Technology (-11.0%) and Industrials (-0.2%).

Energy, Health Care and Utilities typically represent more defensive sectors, that can perform when the economy is in a recession. Energy is also rallying on positive support from the new administration. The stocks in these sectors are priced at a relative discount to other sectors.

A sharp decline in Consumer Discretionary and Technology stocks represented a strong shift in sentiment. These stocks have been the market leaders for a significant time. Some concern is elevating regarding stock valuations and opportunities for growth for these companies moving forward. While growth is likely to persist, it may not be at the level to justify current stock valuations.