In his 2021 annual letter to shareholders, Warren Buffett, the “Oracle of Omaha” and then-head of Berkshire Hathaway, wrote that investors should “never bet against America.”
And while he’s right—the U.S. is the world’s biggest economy—that doesn’t mean that U.S. stocks are always going to be on top. The TSX performance vs. the S&P 500 in 2026 is a great example of why it’s important to diversify your investing portfolio.
From 2023 through 2025, the S&P 500 has reported three exceptionally strong consecutive years of growth, with the index rising 24%, 23%, and 16%, respectively.
It’s been a different story in 2026.
Compared to global markets, U.S. stocks are off to their worst start to a year since 1995. The S&P 500, which tracks the largest U.S. companies, is down 0.14% in 2026. This comes at a time when global markets are surging.
The Toronto Stock Exchange (TSX), which is Canada’s main index, has been on a strong run. In 2024, the index climbed almost 22%. And in 2025, it reported total returns of a whopping 31%, its best showing in over 15 years. The TSX continues to do well in 2026, too.
On February 23, the TSX hit an all-time record high of 33,998; putting it up more than six percent year to date. The index closed in on 34,000 after the U.S. Supreme Court ruled against President Donald Trump’s trade tariffs. The TSX has also been surging higher on strong performances from the financial, technology, and mining sectors.
In late 2025, analysts were calling for the TSX to grow anywhere from five percent to 10%. The index has already passed the low end of that guidance range, so 10% growth might appear a little too conservative now.
It’s not just Canadian stocks that are doing well; the iShares MSCI ACWI ex US ETF (NASDAQ:ACWX), an index that tracks returns across 22 developed markets and 24 emerging markets, is up 9.5% in 2026.
The impact of tariffs on U.S. stocks in 2026 has been significant, contributing to heightened risks and underperformance compared to global markets.
There are a number of reasons why U.S. stocks are underperforming the global markets in 2026. Where the U.S. was once seen as a global ally, tariffs, threats about making Canada the 51st state, annexing Greenland, and striking Iran, among other moves, have heightened risks within the U.S. This, in turn, sent investors to look elsewhere in the world markets.
Then there’s the U.S. economy. It grew at a much slower pace in the fourth quarter of 2025, when the shadow of a government shutdown and tariffs weighed on the economy. The U.S. economy actually ended the year with its weakest growth since the pandemic.
The country’s gross domestic product (GDP) slowed to 1.4% at an annualized rate. That’s lower than the 1.9% rate economists had predicted and sharply lower than the 4.4% rate in the third quarter.
The outlook for U.S. stocks in 2026, from this point in the year, appears somewhat muted. Despite a ruling from the U.S. Supreme Court, the tariff landscape remains uncertain, which isn’t good for either the U.S. economy or S&P 500.
On February 20, President Trump announced that he wants a global tariff of 10%; then he increased that number to 15% the next day. Again, stocks like certainty, so the rapidly changing tariff policies coming out of the White House have flipped the table. And that’s been good news for the TSX and other global stock exchanges.
This divergence in the TSX performance vs. S&P 500 in 2026 highlights the importance of understanding global market trends and having the right tools to navigate an ever-changing investment landscape.
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