Jim Cramer Slams U.S. Stock Market For 'Hideously Underperforming' In Comparison To European Exchanges

The U.S. has some of the world's most well-known and profitable stock exchanges, but they aren't the only game in town. Many nations have well-run, lucrative stock exchanges that offer compelling investment opportunities. Some are making investors so much money that CNBC's Jim Cramer recently slammed U.S. exchanges for "hideously underperforming" compared to their rivals. Is this the beginning of a global shift or just a blip on the radar?

"The money keeps going into these European stocks, and it's rather amazing,"Cramer told CNBC's "Squawk on the Street." The recent trend of high-performing European exchanges traces back to President Donald Trump's tariffs, which have roiled America's stock and bond markets. According to CNBC, Germany's DAX is up 19% this year.

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By contrast, CNBC noted that the S&P 500 is only up 1% in 2025. That doesn't necessarily mean it's time to abandon the S&P 500. No one can deny it has delivered incredible returns for investors, especially over the last decade. However, the index's strengths conceal a big potential weakness. The S&P 500's gains have mostly been in the tech sector, which dominates the Magnificent Seven stocks at the top of the index.

The tech sector depends heavily on components and raw materials from China, and those products are now subject to the Trump administration's tariffs. Although negotiations between Trump and President Xi Jinping are ongoing, the uncertainty surrounding the long-term picture has rattled investor confidence in the U.S. tech sector. 

The uncertainty surrounding big tech is not the only headwind for U.S. stocks. U.S. debt is also a concern for global investors and credit ratings agencies. Moody's downgraded U.S. credit rating only a few hours after Trump proposed a 50% tariff on EU goods. That coincided with a jump in bond yields, which caused investors worldwide to cool on the U.S. market.

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Adverse market conditions and instability are not unique experiences on U.S. exchanges. They've happened before, but investors tended to hedge their bets by making commodities trades or alternative investments on U.S.-based exchanges. The game is very different now, and ironically, much of the change is due to big tech's influence on global commerce.

Investing on foreign exchanges used to be complicated. Now, all it takes is an internet connection and a few clicks on a mobile phone or computer.  "What's happening that didn't happen then is there is an alternative," said Cramer. Increasingly, investors are turning to Europe. CNBC notes that many European stocks offer better price-to-value ratios and stronger returns. That's in addition to the ECB's more investor-friendly interest rate policy.

It's not just individual investors moving their money to Europe. CNBC also sighted research  from investment firm KKR KKR, which said, "Many [chief investment officers] are considering moving assets out of the United States towards other parts of the world." The fact that large institutional investors are also moving their money to Europe means it's more than just a question of convenience.

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Europe offers solid options if you're an investor searching for an alternative to U.S. exchanges. Cramer believes Europe is "safer and more predictable" and says it "can continue to climb given the momentum." Despite that, the recent productivity in the European markets doesn't necessarily mean a permanent power shift is in the cards.

CNBC noted that the U.S. market is still twice as large as Europe's, and still has quality options for investors. It may seem counterintuitive, but moments of market instability often carry the best opportunities for investors to buy stocks with upside at a discounted price. Despite his criticism, Cramer still believes in the U.S. market and its long-term potential. "There are tons of stocks I would like to buy if the prices come down," he said.

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