After Wall Street’s biggest weekly decline since June and the worst week this year for the Dow average, investors will be searching for a rebound. But the best gains may not be at home as investors take notice of an improved outlook in Europe.
Fund managers have started to shift to euro-zone equities after a series of economic indicators showed the region finally emerging from recession.
The region outperformed U.S. stocks in recent weeks, ending 0.2 percent higher this week while Wall Street underwent a 2 percent loss. For the month so far, the total return of euro-zone equities is around 1.9 percent compared to a 1.8 percent loss on the S&P 500.
The difference might also point to which parts of the U.S. market are likely to perform well after a long run by companies that do the lion’s share of their selling within America’s borders.
“The increase in volatility and uncertainty we’ve seen throughout the euro zone is finally coming to an end,” said Diane Garnick, chief executive of Clear Alternatives, an asset management firm in New York.