What Are US Equities

US equities refer to stocks and equity securities traded on US stock exchanges. The main US equities markets are:

• The New York Stock Exchange (NYSE), which operates five equities exchanges using the NYSE Pillar trading technology platform. The NYSE offers multiple trading models to provide a superior trading environment.
• Cboe Global Markets, one of the largest US equities market operators. Cboe provides real-time data on notional value traded in the US cash equity markets.
• Nasdaq, which operates a major electronic stock market. US equities have recently bucked the historical trend of moving inversely to the US dollar.

The US equities markets have seen a mixed earnings season for major tech companies. While some like Microsoft and Alphabet reported strong results, others like Facebook and Amazon faced challenges. The tech sector's resilience will be crucial going forward.

On May 28, 2024, the US securities settlement cycle will accelerate from T+2 to T+1, a major undertaking requiring preparation by financial market participants globally. This will shorten the time between the trade date and settlement date for US equities transactions.

How Do US Equities Markets Compare To Other Global Markets

US equities have outperformed international equities by a wide margin. Between 2010-2022, US equities gaining 12.0% annualized compared to 4.4% for the Morningstar Global ex-US Index. This outperformance is due to factors like the US being the world's most competitively advantaged market, the center of global innovation, and having stronger corporate governance and fundamentals.

However, international equities offer diversification benefits:

• Exposure to faster growing populations, middle classes, consumption, and GDP in Asia and emerging markets
• Lower valuations compared to the US even when adjusting for lower growth
• Exposure to other currencies and less concentrated markets
• Greater opportunities for active investors

International value stocks in particular trade at a significant discount to the overall market currently. Value investing has also historically worked better in international markets than the US.

The US equities market is more expensive based on price multiples than non-US markets. But the premium may be warranted if the US maintains its competitive advantages. Investors could choose to overweight the US, tilt toward foreign stocks, or blend the two.

Ultimately, US equities are most exposed to US economic forces, while international stocks provide exposure to a wider range of economic conditions globally. Deglobalization creates some short-term headwinds for international stocks, but historically the US has not always been the top performing market.

What Are the Factors That Influence the Performance of US Equities Markets

Several factors influence the performance of US equities markets. These factors include:

• Decisions by the Federal Reserve on Interest Rates: The Federal Reserve's decisions regarding interest rates play a crucial role in influencing US equities markets. Changes in interest rates can impact various aspects of the economy, such as the stock market, economic growth, and the value of the US dollar.
• Inflation Data: Inflation rates within the United States can affect stock markets. Rising inflation can put pressure on stocks, impacting investor sentiment and market performance.
• Economic Growth: The overall economic growth of the US, as measured by indicators like GDP expansion rates, influences the performance of US equities markets. Strong economic growth can positively impact stock market trends.
• Sector Performance: Different sectors within the US equities market, such as information technology, healthcare, financials, and consumer discretionary sectors, have varying weights in influencing overall market trends. The performance of these sectors can significantly impact the stock market
• Technology Stocks: The performance of popular technology and growth stocks, like Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms, and Tesla, can have a notable impact on the US equities markets. Changes in the share prices of these tech giants can influence market sentiment.
• Strength of US Dollar : The value of the US dollar is closely tied to the Federal Reserve's interest rate decisions. Maintaining stable interest rates can impact the value of the US dollar, attracting or deterring foreign investments and influencing currency demand.