US stocks are off to their worst start versus the global market since 1995

Market Performance - The US stock market has had its worst start to the year since 1995, underperforming against the global market [1] - The S&P 500 has declined by 1% since the beginning of the year, while the global market index has returned 8% [2] - Over the past year, the ex-US index has increased by 30%, compared to a 10% return from the US market [2] Valuation Trends - US price-to-earnings ratios are currently 40% higher than those in the rest of the world, a significant increase driven by the rise of Big Tech [5] - The US market is trading above a 20x P/E ratio, which is considered unusually high [7] - Historically, US stocks commanded a premium due to expected domestic earnings growth, but this valuation gap is becoming harder to justify as global growth stabilizes [7] Sector Concentration - The US stock market has become heavily concentrated in the tech sector, with the top 10 companies accounting for 40% of S&P 500 holdings, compared to about 20% a decade ago [6] - This concentration increases vulnerability for US equities if expectations around the AI trade decline [6] Geopolitical Factors - Geopolitical risks are increasingly perceived to stem from within the US, affecting investor sentiment and leading to a shift in focus towards global markets [3]