The 'Ex-America' trade is off to a roaring start in 2026

It’s not the “Sell America” trade. Call it the “Ex-America” trade. Since the start of the year, global stocks have outperformed the U.S. market by roughly nine percentage points, according to Goldman Sachs $GS.

The S&P 500 is down about 0.5% year to date. Meanwhile, the MSCI EAFE Index — which tracks developed markets outside the U.S. — has gained roughly 8%. The MSCI ACWI ex-U.S. Index, which excludes American stocks entirely, is up about 8.5%.

Goldman’s research team notes that this marks the worst start to a year for U.S. stocks relative to global markets since 1995.

What explains U.S. underperformance?

U.S. dollar weakness can make global market performance appear magnified, as returns are affected by unfavorable currency conversion. And while it’s true that the USD has fallen significantly over the last year and since the beginning of 2026, that’s hardly the entire story. The USD has fallen about 1% year to date, and about 9% year over year. This suggests stock outperformance accounts for the vast majority of gains.

The underperformance of the U.S. market is notable because, by reputation, the U.S. is considered one of the world’s greatest growth engines. In recent decades, the dominance of Big Tech has helped U.S. returns to beat global returns, though U.S. dominance looks somewhat hazier the farther back you measure.

From 2015 to 2025, companies including Nvidia $NVDA, Apple $AAPL, and Amazon $AMZN – essentially, the Magnificent 7 – carried the U.S. to the heights of global performance, while Europe and most of Asia lagged badly. Over the longer term, looking back over the last 50 or 100 years, the U.S. figures among the world’s best-performing markets, though not always as the sheer top performer, depending on how returns are measured.

Garden variety pullbacks vs. macro deterioration

Statistically, what does early-year U.S. underperformance indicate? That depends.

Unfolding against a backdrop of steady earnings growth and stable U.S. institutions and foreign relations, the U.S. market often recovers into positive territory, delivering gains for the year.

In more volatile conditions, returns become harder to predict, and “volatile” likely better describes U.S. conditions right now. As President Donald Trump considers withdrawing from trade agreements, weighs further tariffs on major trading partners, threatens European powers with annexation of territories, and exerts unprecedented pressure on key U.S. institutions like the Federal Reserve, macro and domestic outcomes become far harder to predict.

What's more, fragmenting trade patterns can spur domestic growth in mature economies across Europe and Asia as countries move away from U.S. imports and focus on producing goods and services more locally. Changing patterns can also spur increased trade that cuts out the U.S. as a source or intermediary. Over time, this can translate to strong market performance within countries. But such effects are difficult to judge over several months.

In this context, the “Ex-America” trade may not be mere seasonal noise, but preliminary evidence that global capital is rethinking concentration risk after a decade of U.S. dominance.