Please ensure Javascript is enabled for purposes of website accessibility

America's Stock Markets Keep Leading the World

By Dan Caplinger - Jul 2, 2021 at 4:48PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

As the U.S. celebrates Independence Day, investors should keep in mind that international stocks haven't all fared as well.

The stock market continued to rise on Friday, with the S&P 500 (^GSPC -0.16%) and Nasdaq Composite (^IXIC 0.00%) reaching new record levels. Only the Dow Jones Industrial Average (^DJI 0.00%) found itself on the outside looking in, but even that venerable market benchmark still posted solid gains on the day.

Index

Percentage Change

Point Change

Dow

+0.44%

+153

S&P 500

+0.75%

+32

Nasdaq Composite

+0.81%

+117

Data source: Yahoo! Finance.

The July 4 holiday celebrates U.S. independence, and American investors often point to the stock market's success as evidence of the nation's long-term economic strength. Yet it's helpful to take a step back and realize that not all stock markets around the world have done as well as U.S. markets, especially in the wake of the pandemic.

American flags outside NYSE with Wall Street sign.

The New York Stock Exchange. Image source: Getty Images.

A look at markets abroad 

It's helpful to get some perspective by looking at international stocks. Most markets are doing a lot better than they were this time last year, but they haven't necessarily put the pandemic behind them as the U.S. market has.

For instance, in the U.K., the FTSE 100 has bounced back sharply from the coronavirus bear market. However, it hasn't yet returned to the levels at which it started 2020, and the long controversy surrounding Brexit had kept British stocks in check during much of 2017, 2018, and 2019. That left them missing out on a big bull-market rally that U.S. stocks enjoyed.

In Brazil, stock exchanges have returned to record highs, but the road has been rocky at best. Multiple waves of COVID-19 infections have put pressure on the South American giant's economy. A sizable correction early in 2021 ate into gains from previous months, although investor sentiment has improved significantly over the past quarter.

And China never felt the direct hit from the pandemic that many other countries around the world did. Its stock market recovered quickly, although recent gains have been measured at best. Moreover, the Shanghai Composite remains far below levels from the mid-2010s and the 2007 surge prior to the global financial crisis.

Some big winners

By contrast, many markets are matching the U.S. with positive results. In Germany, the DAX index started setting all-time records again in late 2020, and it's up about 15% year to date.

Japan has also powered higher, as the pandemic proved to be not nearly as big a drawdown as in other nations. Gains rapidly accelerated in 2021, with the Nikkei approaching levels not seen since all-time records were set in the early 1990s.

Economies with heavy reliance on natural resources have done reasonably well. Australia's market is up just 10% for the year but is at all-time highs. Canadian stocks are up closer to 20%, while strong oil markets have the Saudi Arabian stock market rising more than 25% year to date.

A history of strength

The U.S. stock market has done extremely well -- both lately and over time. That doesn't mean you can't find great stocks overseas, but it should nevertheless serve as a reminder of how fortunate American investors have been to have such a strong environment in which to invest for the long haul.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$32,726.82 (0.00%) $0.00
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$4,145.19 (-0.16%) $-6.75
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
^IXIC
$12,720.58 (0.00%) $0.00

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
377%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/08/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.