U.S. Versus International/U.S. Versus International

by | Oct 7, 2025 | Market Commentary, Market Performance

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 8.4% for the third quarter of 2025. This move brought the index to another all-time high within the quarter. 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 Third Quarter of 2025 was 6.9%.

The U.S. Federal Reserve Federal Open Market Committee lowered benchmark interest rates 0.25% to a range of 4 to 4.25%. Furthermore, the committee indicated the possibility of two more interest rate cuts by the end of the year. International targets remained stable for the quarter after dropping earlier this year. Lowering of the U.S. target rate should decrease borrowing costs for individuals and corporations, thus helping economic growth.

More positive economic prospects for the U.S. can have the effect of rising economic prospects across the globe. Greater prospects for U.S. growth are likely to benefit smaller U.S.- based companies more than larger ones, thus prompting outperformance in the smaller company based Russell 2000 Index, up 12.2% for the quarter. 

 

U.S. Sectors

Top performing U.S. S&P 500 sectors as reported by Koyfin for the Third Quarter of 2025 include Technology (12.5%), Communications (10.3%) and Consumer Discretionary (9.8%). Laggards for the Third Quarter include Real Estate (1.9%), Consumer Staples (1.9%) and Health Care (2.8%).

Stocks that can benefit from growth took center stage again in the third quarter. These stocks benefit from a more muted tariff threat environment and dropping of U.S. interest rates.  Technology stocks continue to report strong earnings and revenue growth. There does not appear to be a significant pullback in consumer spending despite a weakening employment environment.

Health Care and Consumer Staples stocks are typically more defensive in nature and have steady performance regardless of economic conditions. When prospects for greater than expected growth come into play these sectors are typically laggards.