The S&P500 Index (SP: INX) soared 16.39% and delivered total returns, including dividends, of 17.88% last year.
The Nasdaq Composite Index (NASDAQ: .IXIC) outperformed the benchmark with 20.36% growth and total returns of 21.33%.
The Dow Jones Industrial Average Index (DJX: .DJI), which tracks 30 S&P 500 stocks, rose 12.97% and gave a total return of 14.92%.
Top broker Goldman Sachs said the US underperformed some other major markets for the first time in nearly 15 years last year.
In an article, the broker said:
Equity returns in Europe, China, and Asia generated almost double the total returns for the S&P 500 in dollar terms as the US currency declined.
As a result, geographic diversification benefited shares investors last year.
Investors benefited last year if they diversified across regions, and that trend may continue—with diversification among styles and sectors also potentially boosting returns.
The MSCI Asia Pacific ex Japan Index (MXAPJ) and the S&P 500 delivered the best earnings per share (EPS) growth last year compared to the STOXX Europe 600 Index and the Tokoyo Stock Price Index (TOPIX).
In 2026, Goldman expects the MXAPJ to streak ahead to 19% EPS growth while the S&P 500 is expected to achieve a 12% EPS rise.
The broker expects the STOXX 600 to produce EPS growth of 5% while TOPIX is predicted to deliver 9%.
Goldman Sachs says global markets will lift this year on the back of earnings and economic growth supported by lower US interest rates.
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New year predictions for S&P 500
Goldman has a target of 7,600 points for the S&P 500, or a price return of 9% and a total return of 11%, by the end of 2026.
Overnight, the S&P 500 closed 0.53% lower at 6,926.6 points.
The broker has a target of 825 points for the MXAPJ.
That would be a price return of 10% and a total return of 12%, by the end of the year.
The target for the STOXX 600 is 625 points.
That would equate to a price return of 3%, a total return of 7%, and returns in USD of 13%.
The target for the TOPIX is 3,600 points.
That would represent a price return of 2%, a total return of 4%, and returns in USD of 7%.
The broker said geographical diversification should continue to offer the potential for better risk-adjusted returns in the new year.
Goldman Sachs commented:
Investors should look for opportunities for broad geographic exposure, including an increased focus on emerging markets.
They should seek a mix of growth and value stocks and look across sectors.
And they may watch for the possibility that stocks move less in lockstep, creating a good opportunity for picking individual names.
The broker foresees spillover benefits from artificial intelligence into other sectors outside technology in 2026.
Non-tech sectors may perform strongly this year … and investors may benefit from stocks that see positive spillover from technology companies' capital expenditures.
There's likely to be a rising focus on companies outside of the technology sector that will benefit as new artificial intelligence (AI) capabilities come to fruition.
