Bank Behemoth JPMorgan Chase says that one stock market index seems ready to reversal and to exceed the S&P 500 in the following decade.
In a new note of the investment strategy, JPMorgan -analysts Andrew Vanwazer and William M. Smith say that the S&P 500 has meantfully surpassed the MSCI Eafe index over a period of approximately 16 years, but that can begin to change.
The MSCI Eafe index follows the performance of the shares of large and mid-cap companies in Europe, Australazia and the Far East. Investors use the index as a benchmark for the performance of international stock portfolios.
Vanwazer and Smith public participation“
“Since mid-2008, the S&P 500 has reported the MSCI EAFE index with a considerable margin, which supplies the average annual return of 11.9% versus 3.6% until December 2024.”
But JPMorgan says that the US Market Exceptionalism is now starting to crack, especially in the technology sector, after the announcement of China that Artificial Intelligence (AI) Startup Deepseek had launched a model that can compete against the best AI platforms in America.
“As soon as the news about Deepseek broke, for example, the relative appreciation of the American market decreased to EAFE from 55% to 49% – since then it has fallen further to 39% (from 11 March).”
According to the JPMorgan analysts, uncertainties surrounding US economic and foreign policy, acknowledging consumer confidence, increasing inflation because of Trump’s rates and the potential solution of the Ukraine war as catalysts for a shift in market leadership.
“JPMorgan Asset Management’s Long-Term Capital Market Assumptions (LTCMAs) forecast that EAFE stocks may outperform US stocks by 1.4% (8.1% versus 6.7%) over a 10- to 15-year investment horizon. Many investors have been skeptical of that prediction, but recent market events have Underscored How Vulnerable US Equities May Be to Higher Tech Stock Volatility, The Threat of Trade Tariffs and Declining US Consumer trust. “
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