BlackRock favors US stocks over Europe due to stronger earnings and innovative potential

The US stock market remains the best place to invest, with BlackRock Investment Institute predicting stronger earnings for American companies due to AI adoption. US stocks are expected to outperform European peers in the second half of 2025, despite initial underperformance this year.

BlackRock’s optimistic outlook contrasts with some investors calling for diversification away from the US after Trump’s policies shook financial markets. The S&P 500 has returned over 5% this year, trailing the Stoxx Europe 600 Index’s almost 7% gain. However, the European gauge has returned about 22% in dollar terms.

US corporate earnings are expected to grow 6% in the second quarter, significantly higher than the 2% growth in Europe. The innovative potential of the US corporate sector is highlighted by BlackRock, emphasizing the strength of the US equity market. The next US earnings cycle is set to begin this month.

BlackRock also suggests that US stocks are more attractive than Treasuries due to potential inflation from Trump’s trade war. Investors are pricing in too many Fed rate cuts, making Treasuries less reliable as a hedge. The tax bill being debated may add pressure on long-term bonds, further supporting the preference for US stocks.

Read more at Yahoo Finance: In ‘Risk-On’ Markets, BlackRock Favors US Stocks Over Europe