Despite comprising only 4.2% of the world’s population, the U.S. wields an outsized influence in global equity markets. The S&P 500 now represents over 50% of the total global equity market capitalization, according to a recent Wells Fargo analysis.

Wells Fargo attributes this dominance to unique advantages within the U.S. market, including a deep capital market infrastructure and a strong consumer base. With consumer spending accounting for approximately 70% of U.S. GDP, robust demand has fueled economic growth and market resilience. This supportive environment has enabled the U.S. to maintain its position as the world’s largest economy.

Looking ahead, Wells Fargo anticipates the U.S. will remain at the forefront of a global economic recovery projected through 2025. Factors such as fiscal strength, a resilient consumer market, and a highly innovative tech sector are expected to bolster U.S. market leadership during this period.

In contrast, other major markets face obstacles to growth. Wells Fargo notes that economies such as China and other developed nations are hindered by issues like excessive regulation, limited regional integration, and aging populations, which may curtail their market growth potential.

Wells Fargo analysts also foresee further appreciation of the U.S. dollar, favoring large-cap U.S. stocks as attractive investment options. These stocks are expected to retain their leadership as international markets continue to navigate economic challenges.

With a positive outlook on U.S. equities, Wells Fargo recommends investors “remain patient” and focus on opportunities within the robust U.S. market while cautiously observing potential in small-cap stocks.