By Christine Idzelis
Dow also closes at a fresh record high Thursday
The U.S. stock market closed higher Thursday, with the S&P 500 on track for a fourth straight month of gains.
The U.S. stock market is attempting to catch up to the rest of the world after lagging so far in 2025, with its recent momentum seeing the S&P 500 index hit another all-time high on Thursday.
The S&P 500 SPX has now climbed 10.4% over the past three months, widely beating a broad measure of international stocks. The iShares MSCI ACWI ex U.S. ETF ACWX – which tracks an index of equities in developed and emerging markets, excluding the U.S. – has trailed with a 6% rise over the same period, according to FactSet data.
The S&P 500 has seen a big rally from its April low, after tumbling on President Donald Trump’s rollout of tariffs that month. The index, a measure of U.S. large-cap equities, has a track record of beating the rest of the world thanks in part to gains from Big Tech stocks such as Nvidia Corp. (NVDA)
“The outperformance was briefly interrupted earlier this year, but the U.S. market seems to be back on its winning track,” said Yardeni Research in a note emailed Wednesday evening. “The U.S. may be catching up again owing to better-than-expected earnings.”
Closely watched artificial-intelligence chip maker Nvidia reported results for its fiscal second quarter on Wednesday after the closing bell, beating overall expectations. Shares of Nvidia, a Big Tech company with an outsize weighting in the S&P 500, fell 0.8% on Thursday.
“A slight miss on data-center revenue was the main cause for the initial investor hesitation,” said Joe Tigay, portfolio manager at Equity Armor Investments, in emailed comments Thursday. “The data-center miss was directly caused by the U.S. export ban on Nvidia’s H20 chips to China.”
The S&P 500 finished 0.3% higher Thursday, bringing its year-to-date gain to 10.5%, according to Dow Jones Market Data. Even with its recent rally, the S&P 500’s advance remains well behind the iShares MSCI ACWI ex U.S. ETF’s jump of 20.9% in 2025 through Thursday.
“We continue to recommend a ‘stay home’ investment strategy rather than a ‘go global’ one,” said Yardeni. “We’ve been doing so since 2010, and it has worked out very well.”
Shares of the SPDR S&P 500 ETF Trust SPY, which tracks the U.S. equities benchmark, have soared about 482% since the end of 2009 through Thursday, according to FactSet data. That trounces the roughly 54% rise in shares of the iShares MSCI ACWI ex U.S. ETF over the same period.
“We’ve often observed that the outperformance of the U.S. in the global stock-market derby is fundamentally based on the outperformance of the U.S. MSCI[‘s] forward earnings compared to the forward earnings of the rest of the world,” said Yardeni, citing the chart below.
YARDENI RESEARCH
The S&P 500 has rallied 4.8% so far in the third quarter, and is on pace for a fourth straight month of gains in August, FactSet data show.
Volatility in the U.S. stock market has been “really low” lately, said Adam Turnquist, chief technical strategist for LPL Financial, in a phone interview Thursday.
The Cboe Volatility Index VIX, often referred to by its ticker symbol VIX, has dropped 13.7% this month to close at 14.43 on Thursday, FactSet data show. That’s well below its long-run average of around 20.
Turnquist said some investors may be complacent following the U.S. stock market’s recent strong run, as the bull market risks taking “a breather” or maybe seeing a “healthy type of pullback.” With the S&P 500 trading at around 22 times its forward earnings, “there seems to be a lot of good news priced in,” he noted. “A lot has to go right for that momentum to continue.”
Nvidia’s momentum appears to be slowing on a near-term basis, while the U.S. stock market at large faces macroeconomic risks such as the potential for hotter-than-expected inflation, according to Turnquist.
On Friday, investors will get a reading on U.S. inflation in July, as measured by the personal-consumption expenditures index.
“I would still be a bit leery about the inflation outlook,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors, in a phone interview Thursday. “I don’t think we’ve seen the full impact of the tariffs filtering through at this point.”
All three major U.S. stock benchmarks closed up Thursday, including the Dow Jones Industrial Average DJIA and the tech-heavy Nasdaq Composite COMP. The Dow also finished with a fresh record closing high, according to Dow Jones Market Data.
-Christine Idzelis
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08-28-25 1723ET
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