The S&P 500 has retaken all-time highs. Here’s how much European and Chinese stocks raced ahead while U.S. markets regained lost ground

• U.S. stocks have completed a massive round trip, with the S&P 500 returning back to where it was about four months ago. That’s after an epic selloff triggered by President Donald Trump’s steeper-than-expected tariffs, which have since been put on hold. Meanwhile, stocks in Europe and China have soared as investors turned away from “American exceptionalism.”

The S&P 500 retook the all-time high set on Feb. 19 and surpassed it on Friday, completing a massive roundtrip that saw U.S. stocks crash on President Donald Trump’s trade war then claw their way back a few months later.

But while investors can feel whole again after witnessing their portfolios get obliterated, there’s also lingering regret over what they missed out on—or what could have been.

For example, where would the S&P 500 be today if Trump hadn’t shocked Wall Street with much steeper than expected tariffs that sent it crashing nearly 20%?

At the end of 2024, many Wall Street forecasters expected the broad market index to soar to 7,000 this year or finish just below that threshold, building on two straight years with gains of more than 20% each.

Back then, the notion of continued “American exceptionalism” in the global economy and financial markets remained the dominant narrative, as investors focused more on Trump’s tax cuts and deregulation than his tariffs. That contrasted with views for more stagnation in Europe and further slowing in China.

Fast-forward to today, and the script has flipped. Investors plowed capital into overseas markets, especially after “Liberation Day” in early April. The U.S. Dollar Index is down 10% this year as investors no longer see America as exceptional and doubt the safe-haven status of the greenback.

Meanwhile, Europe and China are looking for ways to boost growth and offset an expected drag from weaker exports to the U.S.

Europe is eyeing ways to deregulate and plans a big dose of fiscal stimulus in the form of more defense spending. That’s as NATO allies rush to rearm amid Trump’s demands for more burden-sharing, fears of Russian aggression, and doubts about the U.S. security shield.

China, the top target of Trump’s trade war, has also unleashed more fiscal stimulus and vowed increased support for consumers as Beijing seeks to shift its economy more toward domestic demand and away from export-oriented growth. At the same time, China’s gains in AI, as demonstrated by DeepSeek’s stunning advances, have added to the bullishness.

Those policy pivots have fueled stock rallies that are largely beating U.S. markets, meaning investors who shunned Europe and China missed out on big gains.

The DAX stock market index in Germany is up 20% year to date, and the MSCI Europe stock index has surged 21%. Other European indexes have made more modest gains but still are outperforming the U.S., with the FTSE 100 up 8%.

In China, Hong Kong’s Hang Seng Index is up 21% this year, and the iShares MSCI China ETF is up 18%. (But the Shanghai index has only eked out a 2% gain so far in 2025.)

For its part, the S&P 500 is now ahead 5% this year. That’s after Trump put his most aggressive tariff rates on hold and reached trade deals with the U.K. and China. Meanwhile, corporate earnings held up, inflation readings didn’t spike, and some Federal Reserve policymakers pushed for earlier rate cuts.

But the U.S. stock market recovery is built on hope as much as actual results. Investors are hoping the trade war doesn’t escalate again, inflation stays in check, earnings can power through, and the economy doesn’t tip into a recession—not to mention containing tension in the Middle East.

To be sure, it’s still possible for the S&P 500 to reach those upbeat forecasts that Wall Street saw before Trump’s trade war. But the key question for investors is whether U.S. stocks can return to long-term outperformance over other markets.

This story was originally featured on Fortune.com