Jim Cramer Slams U.S. Stock Market For 'Hideously Underperforming' In Comparison To European Exchanges
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The U.S. has some of the world's most well-known and profitable stock exchanges, but they aren't the only game in town. Many nations have well-run, lucrative stock exchanges that offer compelling investment opportunities. Some are making investors so much money that CNBC's Jim Cramer recently slammed U.S. exchanges for "hideously underperforming" compared to their rivals. Is this the beginning of a global shift or just a blip on the radar?
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"The money keeps going into these European stocks, and it's rather amazing,"Cramer told CNBC's "Squawk on the Street." The recent trend of high-performing European exchanges traces back to President Donald Trump's tariffs, which have roiled America's stock and bond markets. According to CNBC, Germany's DAX is up 19% this year.
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By contrast, CNBC noted that the S&P 500 is only up 1% in 2025. That doesn't necessarily mean it's time to abandon the S&P 500. No one can deny it has delivered incredible returns for investors, especially over the last decade. However, the index's strengths conceal a big potential weakness. The S&P 500's gains have mostly been in the tech sector, which dominates the Magnificent Seven stocks at the top of the index.
The tech sector depends heavily on components and raw materials from China, and those products are now subject to the Trump administration's tariffs. Although negotiations between Trump and President Xi Jinping are ongoing, the uncertainty surrounding the long-term picture has rattled investor confidence in the U.S. tech sector.
The uncertainty surrounding big tech is not the only headwind for U.S. stocks. U.S. debt is also a concern for global investors and credit ratings agencies. Moody's downgraded U.S. credit rating only a few hours after Trump proposed a 50% tariff on EU goods. That coincided with a jump in bond yields, which caused investors worldwide to cool on the U.S. market.
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Adverse market conditions and instability are not unique experiences on U.S. exchanges. They've happened before, but investors tended to hedge their bets by making commodities trades or alternative investments on U.S.-based exchanges. The game is very different now, and ironically, much of the change is due to big tech's influence on global commerce.