U.S. Equities: Momentum Fades – Intermarket Analysis, October 2025
After a challenging first quarter in 2025, U.S. equities attempted to regain ground against other global markets. However, in recent weeks, the strength of this rebound appears to be losing momentum.
The first indicator to consider is the relative strength ratio between the MSCI World ex U.S. index (which tracks global equities excluding the United States) and the S&P 500.
Once again, we see a familiar pattern: a strong rally in non-U.S. markets during the first quarter of 2025, followed by a recovery in the S&P 500 starting in April.
The current sideways phase does not indicate a clear leadership by either index but suggests that the upward momentum of the U.S. market is gradually fading.
A similar picture emerges when comparing the Eurostoxx 50, which represents Europe’s leading companies, with the S&P 500.
Here too, three distinct phases can be identified:
- an initial period favoring European equities in the first quarter of 2025;
- a U.S. recovery phase during the middle part of the year;
- and finally, a renewed period of relative strength for the Eurostoxx 50 between late September and October.
The comparison with emerging market equities reinforces the view that the U.S. recovery is far from complete.
The relative strength indicator moved sideways from April to September, before rising again in October, signaling renewed momentum in emerging markets relative to the S&P 500.
In summary, intermarket indicators suggest that the U.S. equity market has regained stability after a difficult start to the year, but still lacks the decisive strength needed to reclaim global market leadership.
