Insights Chart of the Week

Led by Tech, U.S. Outperforming Since Mid-April

July 16, 2025

Time to Read: 2 minutes

The first quarter of the year gave many investors pause about U.S. exceptionalism as other regions outperformed the U.S. stock market, despite higher domestic productivity, greater innovation, and the U.S.’ comparatively attractive employment demographics. While the debate over where to invest ensues, the U.S. has resumed its outperformance since mid-April.

In fact, since the S&P 500’s year-to-date low on April 8, the index has advanced 26%, which surpasses the rest of the world by 4.5%. The technology sector has breathed new life into U.S. leadership, with the Magnificent 7 companies up 38% since April 8 and the information technology sector up a significant 45%.

The new One Big Beautiful Bill Act permits the full expensing of capital expenditures for businesses, as well as write-offs of qualifying research and development expenditures within the first year. Looking ahead, we expect these provisions to increase capital investments and further expand the adoption of artificial intelligence, leading to continued tech-led U.S. strategic outperformance. As a result, we reiterate our positive view on U.S. large cap equities.

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Don’t Fear Investing at New Highs

The S&P 500 recently hit another all-time high. Is it therefore time to exercise more caution? Not in our view. We see the potential for further upside, and history is on our side.

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Oil: Less Sensitive to Middle East Conflict

The recent Middle East conflict sparked concerns surrounding Iran’s oil supply and the impact it could have on oil prices and the current disinflation trend. However, the price of oil is now at the level it was before the first strike on Iran. Due to the shale revolution, the oil market is ruled by new dynamics.

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Margin Resilience Is Key

This year U.S. equities have underperformed the rest of the world due largely to policy uncertainty. However, an important driver of U.S. equity outperformance over the longer term has been stronger earnings and profit margins relative to peers, and our view is these factors will continue to drive long-term U.S. exceptionalism.

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What Is Driving Slowing Inflation?

Inflation came in cooler than expected in May. In fact, it’s down from January’s growth rate of 3.0% year over year to 2.4%. While stickier services components such as shelter have driven this decline, could the recent uptick in oil prices and higher tariffs pose headwinds?

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