Investors were placing bets at the beginning of the year that President Donald Trump’s policies would cause the dollar and U.S. stocks to do better than their international counterparts. More and more people are testing that premise.
The narrative of U.S. exceptionalism has been threatened by the Trump administration’s big trade and other policy changes and government overhaul, which have instead created uncertainty and made businesses and consumers anxious about the state of the economy.
According to Garrett Melson, portfolio manager at Natixis Investment Managers, the policy uncertainty is “leading to a dynamic… where you start to see investors and business leaders and consumers alike kind of reining things in a little bit.”
“That’s against a background that, aside from the policy changes and the Trump administration noise, was already on a cooling trajectory” for the economy of the United States, he stated.
Furthermore, the nation’s megacap tech and growth firms, which accounted for a large portion of the market’s recent advances, have stuttered due to valuation issues and concerns about the DeepSeek low-cost Chinese artificial intelligence model. From its peak in mid-December, one ETF that tracks the so-called “Magnificent Seven” group has down more than 10%.
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