As Americans prepare to celebrate Thanksgiving on 27th November 2025, UK investors might find themselves reflecting on an unexpectedly resilient year for US equity markets. Despite facing significant headwinds including trade disruptions, political uncertainty and fierce technological competition, American markets have demonstrated remarkable strength.
The Tariff Shock and Rapid Recovery
The year began with considerable optimism as post-election enthusiasm, deregulation expectations and potential tax cuts buoyed investor confidence. However, this positive sentiment faced a severe test in early April when President Trump's dramatic "Liberation Day" declaration introduced sweeping tariffs that affected even America's closest allies.
The immediate market reaction was brutal. On 3rd April 2025, the S&P 500 plummeted nearly five per cent while the Nasdaq Composite dropped six per cent. The selling pressure intensified throughout the following week, with losses deepening to approximately 12 per cent for the S&P 500 and more than 13 per cent for the Nasdaq by 8th April.
Yet the recovery proved equally dramatic. When the Trump administration announced a 90-day delay of the tariffs on 9th April, markets roared back. By the close of trading that day, the S&P 500 had surged close to 10 per cent and the Nasdaq jumped more than 12 per cent.
AI Dominance and Corporate Resilience
Beyond the tariff turmoil, US markets faced additional challenges including sticky inflation, geopolitical tensions and even a government shutdown. The competitive landscape intensified when Chinese AI firm DeepSeek emerged as a formidable low-cost competitor in January, raising questions about America's innovation leadership.
Despite these pressures, corporate America delivered impressive results. The third quarter earnings season proved particularly strong, with more than 80 per cent of S&P 500 companies exceeding expectations. Both profit margins and revenue growth outpaced historical norms, underscoring the underlying health of US corporations.
Technology stocks, particularly AI-related companies, drove much of this momentum. The so-called "Mag 7" now account for approximately one-third of the S&P 500's total market capitalisation. Nvidia's achievement of a $5 trillion valuation milestone exemplifies the scale and speed of this technological transformation.
Lessons for UK Investors
For British investors considering US market exposure, the events of 2025 offer valuable insights. While policy uncertainty from tariffs and interest rates continues to pose volatility risks, and certain sectors show elevated valuations, the fundamental case for US investment remains compelling.
As of mid-November 2025, the S&P 500 had gained 11 per cent year-to-date, while the Nasdaq Composite advanced 14 per cent. The index's double-digit expected EPS growth for 2025 signals healthy demand and corporate resilience.
Charles Schwab's chief investment strategist Liz Ann Sonders emphasises that attempting to time the market rarely proves effective compared to maintaining consistent market exposure. Long-term discipline, diversification and periodic rebalancing remain the most reliable strategies for navigating uncertainty.
Including US equities within a diversified global portfolio continues to represent a prudent approach for investors seeking growth and resilience. As Thanksgiving encourages reflection on future prospects, the US market's 2025 performance demonstrates that innovation and adaptability continue to drive long-term value creation.
