The S & P 500 has underperformed most stock markets in Europe and Asia since the start of 2025, but that trend could be ripe for a reversal of fortunes, according to strategists at Barclays. The large-cap U.S. index has returned 3% year-to-date as of April 22 , while other markets have pulled ahead, continuing a trend that began in 2025 — a year characterized by the ‘Sell America’ trade, as global investors trimmed their exposure to U.S. assets. Top performers in 2026 include the U.K.’s FTSE 100 with a 5.5% return, while both Japan’s Nikkei 225 and South Korea’s Kospi are pushing through all-time highs. The two Asian indices have returned 15% and 49% year-to-date, respectively. Meanwhile, Latin American stocks have continued to enjoy double-digit gains thanks to their distance from and limited direct trade links to the Middle East, as well as the region’s commodities wealth. The rally in European bourses has run out of steam somewhat, however, with Germany’s Dax falling 1.4% for 2026 and France’s Cac 40 is broadly flat. The pan-European Stoxx 600 is up 3.3% since the start of the year. In any case, the S & P 500 is yet to find its form this year, despite touching an all-time high of 7,143 on April 17. “Within the U.S., healthcare and financials have weighed on performance, while energy, materials, and industrials have benefited from higher commodity prices and firmer cyclical sentiment,” wrote Barclays analysts in a note published Wednesday. “Small caps have outperformed large caps, and S & P 500 concentration has continued to ease from a multi-decade peak, even as the top 10’s share of aggregate earnings-per-share reaches new highs.” “Tech and financials largely explain the U.S.’s relative underperformance versus Europe and Asia-Pacific.” Despite the stuttering performance in some sectors, Barclays offered up 3 reasons why U.S. equities could fare better in the coming months. .SPX .GSPHC YTD line Healthcare and financials have been among the S%P 500’s biggest detractors this year, Barclays said Earnings up, valuations down First, the analysts see the U.S. as having “stronger capacity” to absorb the energy shock from the disruption to the Strait of Hormuz, while Europe and Asia bear the brunt of higher oil prices. Barclays highlighted a largely resilient U.S. consumer and strong flows into U.S. equity funds — over $100 billion in 2026 so far – as two examples of steadfast bullishness in markets despite the fallout from the ongoing Iran conflict. Next, the analysts expect earnings momentum to favor the States. “The Street continues to expect U.S. net margins to exceed global peers, with full-year margin estimates leading across market caps,” they wrote. “Although earnings revisions in Europe and APAC have improved, neither matches that of the US.” Barclays also sees U.S. stocks as having become relatively cheaper. The analysts point out that U.S. equity valuations have declined in recent months, “easing some of the pressure” that had built up through prior years. That’s not to say American companies are bargains; rather, they have grown into their lofty valuations over time by a series of stellar earnings reports. Barclays added that “Big Tech looks much cheaper vs the S & P compared with its own history”, indicating a more attractive entry point for the Magnificent Seven than year-to-date performance suggests.
