What to be grateful for this Thanksgiving? the resilience of the US markets
In a year shaped by global uncertainty, technological disruption and political change, investors should still have plenty of reason for optimism, says Liz Ann Sonders
While Brits prepare for the final sprint before Christmas, many Americans pause on 27 November to gather around the table for Thanksgiving – a moment to reflect and express gratitude for family, friends and the blessings in our daily lives. For investors, it can also be a chance to reflect on what has been an extraordinary year for the US equity markets, one shaped by global uncertainty, technological disruption, shifting policy dynamics and, ultimately, optimism for the future.
At the start of 2025, bullish sentiment was high. Post-election enthusiasm, expectations of deregulation and hopes for tax cuts fuelled confidence in US markets. But by early Q2, that narrative was upended. The abrupt announcement of sweeping tariffs, spared not even for America’s closest allies, and sent shockwaves through global trade. In the immediate aftermath of President Trump’s “Liberation Day” declaration on 2 April, US equity indices experienced a historic sell-off: the S&P 500 fell nearly five per cent on 3 April and the Nasdaq Composite dropped six per cent. Losses had deepened through 8 April with declines reaching roughly 12 per cent for the S&P 500 and more than 13 per cent for the Nasdaq. On 9 April, the Trump administration announced a 90-day delay of the “Liberation Day” tariffs and by the end of that trading day, the S&P 500 was up close to 10 per cent and the Nasdaq was up more than 12 per cent.
Questions about the resilience of the US economy – and whether American exceptionalism could withstand such disruption – intensified. The challenge was amplified by sticky inflation, geopolitical turmoil, and even a government shutdown. Meanwhile, competitive pressures mounted when low-cost Chinese AI firm DeepSeek burst onto the global stage in January, raising doubts about whether US innovation leadership could be sustained.
Healthy demand and corporate resilience
Yet, despite these headwinds, the US economy and its markets have demonstrated remarkable adaptability. Initial optimism around deregulation and rate cuts gave way to a more sober reality: Supply-side changes continue to arrive unevenly, while demand remains sensitive to rates and real incomes. Still, the strength of US equity markets speaks for itself. As of mid-November, the S&P 500 and Nasdaq Composite were up 11 per cent and 14 per cent YTD respectively. Third quarter earnings season has been strong, with more than 80 per cent of S&P 500 companies reporting results that exceeded expectations, and profit margins and revenue growth outpacing historical norms. The S&P 500’s double-digit expected EPS growth for 2025 underscores healthy demand and corporate resilience.
Much of this momentum has been propelled by innovation. AI-related stocks have dominated headlines, with the so-called “Mag 7” now accounting for about one-third of the S&P 500’s market capitalization. Nvidia’s historic valuation milestone of $5 trillion is emblematic of the scale and speed of this transformation. While some question whether this concentration signals a bubble, many leading AI companies have delivered strong top- and bottom-line growth. AI is not just a theme, it’s a structural force reshaping productivity and creating new investment opportunities that will extend well beyond 2025.
Long-term discipline, diversification, and periodic rebalancing remain the most reliable tools for navigating uncertainty
Of course, risks remain. Policy uncertainty, from tariffs to interest rates, could inject volatility, and elevated valuations in certain sectors warrant caution. For UK investors seeking to diversify by investing in the US markets, the temptation to wait for a further pullback would be understandable. But history teaches that timing the market is far less effective than time in the market. Long-term discipline, diversification, and periodic rebalancing remain the most reliable tools for navigating uncertainty.
Thanksgiving offers a chance to reflect on what the future might hold, looking forward just as the markets do. While political turbulence and trade frictions are ever present, the US market’s performance this year underscores a durable truth: innovation and adaptability drive long-term value creation. Including US equities in a diversified global portfolio remains a prudent strategy for investors seeking growth and resilience.
The best approach? Stay invested, stay diversified, and let compounding work its quiet magic. That’s something every disciplined investor can be thankful for.
Liz Ann Sonders is chief investment strategist at Charles Schwab