NEW YORK: U.S. stocks have lagged major overseas markets in early 2026 by the widest margin in more than three decades, with Goldman Sachs data showing the weakest relative start to a year since 1995. The gap has been driven by stronger gains across developed and emerging markets outside the United States while key U.S. benchmarks have struggled to keep pace amid uneven performance in large technology shares.
Goldman’s mid-February comparison put the outperformance of global equities over U.S. stocks at roughly nine percentage points for the year to date, a spread it said had not been seen this early in a year since 1995. In that snapshot, the S&P 500 was around flat while MSCI’s major non-U.S. benchmarks were up solidly. After a late rebound, the S&P 500 closed at 6,881.31 on Feb. 18, up about 0.5% for 2026.
The divergence has been most visible in indexes that exclude U.S. stocks. The MSCI EAFE Index, which tracks developed markets outside the United States and Canada, and the MSCI ACWI ex USA Index, which covers developed and emerging markets excluding the United States, have been among the leaders cited in market comparisons this month. In contrast, the Nasdaq Composite remained down about 2.1% for the year as of the Feb. 18 close, reflecting weakness in parts of the technology sector.
U.S. trading has been marked by sharp moves in mega-cap technology and related industries. A rally on Feb. 18 was lifted by a jump in Nvidia after Meta Platforms announced an agreement to use millions of Nvidia chips in its artificial intelligence data centers, helping push the S&P 500 higher and the Nasdaq up on the day. Even so, the Nasdaq’s year-to-date decline has underscored how concentrated pressure in high-weighted technology groups can weigh on U.S. benchmarks.
Flows shift toward international equities
Money flows have also highlighted the early-year rotation. LSEG Lipper data showed global ex-U.S. equity funds, including exchange-traded funds, attracted $15.4 billion of inflows in January, the strongest monthly intake in about four and a half years. That compared with $5.7 billion of inflows into U.S.-focused equity funds, the smallest in three months. In the first week of February, ETFs investing in ex-U.S. markets drew an additional $1.4 billion, the data showed.
The underperformance comes after a year in which U.S. stocks finished strongly but faced stiffer competition from abroad. The S&P 500 ended 2025 at 6,845.50 after gaining 16.4% for the year, with investors focused on artificial intelligence and the largest technology companies. Over the same period, broad non-U.S. benchmarks posted larger gains, setting a higher starting point for international markets heading into 2026 and reinforcing comparisons that emphasize how returns can differ across regions.
Currency and benchmark effects
Currency movements can influence the returns U.S.-based investors see from foreign assets, because overseas gains translate back into dollars. Goldman’s analysis of the early-2026 performance gap noted that the U.S. dollar had been modestly lower for the year at the time of its calculation, but it also said the bulk of the relative advantage reflected stronger equity gains outside the United States. Market participants also caution that results can vary depending on whether comparisons use developed-only benchmarks or broader measures that include emerging markets.
Even after the S&P 500 moved back into positive territory for the year, the early gap versus overseas markets remained large by recent standards. Within the U.S. market, performance has been uneven, with the Dow Jones Industrial Average up about 3.3% for 2026 through the Feb. 18 close and the Russell 2000 small-cap index up about 7.1% over the same period, while the Nasdaq remained negative. The contrast has kept attention on how leadership is shifting across regions and sectors at the start of 2026. – By Content Syndication Services.