TLDR:
- US stock futures pointed to a strong open ahead of Nvidia’s earnings report
- Global stocks rose with Europe’s benchmark reaching a record high
- International dividend stocks have outperformed US dividend stocks over the past five years
- Technology sector dominance in the US has been a handicap for US dividend stocks
- Copper prices surged following President Trump’s tariff threat on the metal
Global stock markets gained ground on Wednesday, February 26, 2025, as investors eagerly awaited Nvidia’s earnings report. The tech giant’s results, due after US market close, could potentially reignite the artificial intelligence-driven rally that has powered markets over recent years.
US stock futures showed strength ahead of the Wall Street open, with Nvidia shares rising as much as 3% in premarket trading. Contracts on the Nasdaq 100 climbed about 0.6% while those on the S&P 500 gained 0.4%. Options data suggests Nvidia’s stock could move 8.5% in either direction following the earnings announcement.
The Nvidia report comes at a critical time for tech stocks. The “Magnificent Seven” group of tech megacaps recently entered correction territory on Tuesday, reflecting growing concerns that AI computing adoption may not follow a straight upward path. These tech bellwethers ticked higher in Wednesday’s premarket trading.
“We need a good set of numbers from Nvidia to keep this bull track in place in the US,” said Guy Miller, chief market strategist at Zurich Insurance Co. “It will be important that the numbers are good and the outlook is good. If it’s a really disappointing reading the market will be vulnerable to a further setback.”
Other stocks making moves in premarket trading included Super Micro Computer Inc., which jumped 25% after meeting a deadline to submit financial reports to maintain its Nasdaq listing.
Human resources firm Workday Inc. rallied on better-than-expected results, while General Motors Co. gained following a $6 billion buyback announcement.
In Europe, the regional stock benchmark rose to a record high, led by resources and mining companies. Strong results from companies including Anheuser-Busch InBev, Banco Santander SA, Fresenius SE, and Alcon AG further boosted market sentiment.
Bond markets saw the yield on 10-year Treasuries stabilize after Tuesday’s 11-basis-point decline, which was fueled by weaker-than-expected economic data and increased bets on Federal Reserve policy easing. Borrowing costs edged two basis points higher, and the dollar firmed against G-10 peers as investors awaited a speech by Federal Reserve official Raphael Bostic.
International Dividend Stocks
While US dividend stocks have struggled to keep pace with the broader market, international dividend stocks have been thriving. Both the Morningstar Global Markets ex-US High Dividend Yield Index and the Morningstar Global ex-US Dividend Growth Index have outperformed the broad market for developed and emerging markets outside the US over the past five years.
The performance gap between US and international dividend stocks can be largely attributed to sectoral dynamics. The US stock market has been dominated by technology-oriented stocks, particularly the “Magnificent Seven,” which have driven market returns but are not typically dividend-rich. Technology stocks represented 32% of US equity market value entering 2025 but just 16% of the US high-dividend yield index and 19% for dividend growth.
In contrast, technology makes up only 14% of the broad market outside the US, with dividend indexes allocating just 7%-8% to the sector. This reduced exposure to tech has been less of a handicap for international dividend stocks.
Financial services, a sector that has performed strongly in recent years, represents a much larger portion of markets outside the US and is overweight in both international dividend indexes. Banks in Europe, Japan, Canada, and Australia have benefited from higher interest rates increasing net interest margins. Insurers like Allianz and AXA have also contributed to the outperformance of international dividend indexes.
The overall market environment has also played a role in this divergence. The broad US equity market has returned nearly 100% on a cumulative basis over the past five years, while stocks outside the US are up less than 50%. Dividend-paying companies, which tend to be more mature and stable, have looked sluggish compared to the turbocharged US market but have thrived relatively in the lower-return environment outside the US.
In the one down year for equities during this period (2022), dividend indexes in both the US and international markets lost far less than the broad equity market. However, in the big up years for the US market (2021, 2023, and 2024), growth-oriented businesses outpaced the steadier dividend-payers.
Copper prices dominated commodity trading on Wednesday, surging after President Trump’s latest tariff threat. Gold remained near its recent all-time high as investors continued to seek safe-haven assets amid market uncertainty.
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