October 22, 2025: The Narrative that Burned Out

The hot narrative for the first half of 2025 was “The End of American Exceptionalism.” That narrative gained traction after international large-cap stocks outperformed U.S. stocks by over 10% in Q1—the largest margin in more than 15 years. At the time, we noted that while dramatic, the narrative was premature. Much of the outperformance was a reversal of the prior quarter’s U.S. strength. Indeed, for the trailing 12 months through September, U.S. stocks have outpaced international peers.

Those questioning the durability of America’s exceptional era rightly point to real challenges. Yet, the United States retains long-term advantages that support its status as the preeminent investment economy. Among these are favorable demographics and a culture of innovation, backed by deep, liquid capital markets.

Also worthy of note is the consistency of corporate earnings growth. While U.S. stock markets are more expensive than many international markets, that price reflects both superior projected earnings growth and the stability those earnings have exhibited over time.

In short, the spring’s hot narrative has cooled—and for good reason.

Weekly Market Update: October 22, 2025