The vibes have been off for U.S. stocks in 2025. The S & P 500 is down about 2% year to date, even after hitting an all-time high last month. In contrast, the rest of the world seems to be doing great. The iShares MSCI All-Country World Index ex-U.S. ETF (ACWX) has popped 8.9% this year. Europe’s Stoxx 600 index is up 9.3% so far in 2025 and hit an all-time high earlier in March. This year’s underperformance by U.S. stocks comes amid uncertainty around the Trump’s administration’s trade policy and tariff plans — and how that may affect the economy. This trend, however, could see a reversal in the near term, according to some on Wall Street. .SPX ACWX,.STOXX YTD mountain SPX vs ACWX and STOXX 600 year to date “While we have seen the rotation out of U.S. into EU YTD … yesterday’s price action suggests a pause or reversal in this rotation may be coming soon,” traders at JPMorgan wrote. “Our colleague James Creager tells us that ‘[I] think Europe vs U.S. is done for now: 1) valuation gap closed… SAP on 40x, GOOG on 18.5x, MSFT on 29x. Mag7 valuation now looking ‘cheap’ vs historic; 2) Europe benefited from exodus from U.S. tech, U.S. tech as a sell is significantly less obvious here; 3) Mkt was too extreme in pricing U.S. exceptional on DJT win, that’s already unwound; 4) CTA / technical setup (CTA now long EU vs U.S. top end of historic range); 5) Huge month end / Q End buying to come is +ve US vs EU,” they added, referring to hedge funds using commodity trading advisor strategies. U.S. stocks are showing signs of fighting back. Over the past week, the S & P 500 is up 2.7%, while the Stoxx 600 is flat. The ACWX has fallen 0.8% over the past week. A look at the charts also points to a bounce for U.S. equities against their international counterparts, according to Wolfe Research. “It looks like the U.S. is setting up for a little near-term outperformance vs. the rest of the world following a tough 4-month stretch. We flagged the parabolic advance and overbought condition of the U.S. back in mid-November and following a violent unwind, we are now seeing the mirror image develop on a few different fronts,” wrote strategist Rob Ginsberg. Specifically, he noted that Chinese tech stocks are now overbought relative to the Nasdaq-100 index, while the S & P 500 recently teetered near oversold territory. The benchmark’s 14-day relative strength index reading sits around 30, near the level that has preceded sharp rebounds in the index. Elsewhere Tuesday morning on Wall Street, Morgan Stanley’s Adam Jonas upgraded Carvana to overweight from equal weight . “While Carvana remains more exposed to a lower strata of auto credit relative to the rest of our auto coverage, the company has demonstrated execution with profitable growth and addressed leverage concerns,” Jonas said in a note.