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By Mehnaz Yasmin (Reuters) -More global investors are rotating into non-U.S. "value" stocks, fund managers say, as stretched U.S. valuations, rising fiscal strains, and weakening cash flow forecasts make rallying American equities look comparatively less attractive. Investors have withdrawn $152 billion from U.S. growth funds in the first nine months of 2025, even as the S&P 500 advanced into record high territory, already equaling total outflows for all of 2024, LSEG data for September showed.  Asset managers overseeing more than $6 trillion told the Reuters Global Markets Forum that investors expect non-U.S. "value" and small-cap equities to benefit from overseas dovish monetary policy, increased fiscal stimulus, and cheaper valuations.  Outside the U.S., stronger earnings, margins and returns highlight underappreciated fundamentals in small-cap and value stocks alongside already attractive valuations. "From a valuation perspective, we like non-U.S. value stocks – so yes, a factor tilt," Sebastien Page, head of global multi-asset and chief investment advisor at T. Rowe Price told the Reuters Global Markets Forum. The global investment management firm oversees $1.73 trillion in assets, with Sebastien’s multi-asset division accounting for $602 billion. Value stocks appeal to investors seeking stability and income because they trade at low valuations, often pay dividends, and cluster in mature sectors like financials, industrials, and energy. By contrast, growth stocks, including the “Magnificent Seven” and other AI-driven giants that have propelled the S&P 500 to record highs, trade at rich valuations, rarely pay dividends, and appeal to investors who are willing to weather short-term volatility in the search for long-term capital gains. Spreads between value and growth in the MSCI Europe, Australasia and Far East (EAFE) indices point to cumulative outperformance by value, with index levels at record highs, according to MSCI data.  "EAFE Value, especially in dollar terms, has been one of the best-performing asset classes year-to-date. At the same time, by historical standards, the asset class remains cheap," Page said. Growth and value factors diverge by region: growth has historically led in the U.S., while value has dominated overseas.  "At the end of last year, we diversified away from our long U.S. equity position" into Europe, Japan and emerging markets (EM), said John O'Toole, global head of multi-asset solutions at Amundi. "That's not to say we went underweight (on U.S. equities)," O'Toole said, but on long-term valuations, "there's a compelling case to diversify and expose yourself to other performance drivers." Even so, U.S. growth funds continued to dominate performance despite heavy redemptions, as the earnings strength of tech and communication giants, buoyed by artificial intelligence and buybacks, keeps growth in the lead.  Spreads between value and growth in the MSCI USA indices point to continued growth outperformance, MSCI data showed. "In the near term, companies have limited options to hedge against U.S. concentration risk, as U.S. AI capex still dwarfs the rest of the world," said Gary Tan, portfolio manager at Allspring Global Investments.  (Join GMF on LSEG Messenger: ) (Reporting by Mehnaz Yasmin in Bengaluru; Additional reporting by Ankika Biswas and Ankita Yadav; Editing by Divya Chowdhury, Alden Bentley and David Gregorio)

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By Stephen Culp NEW YORK (Reuters) -U.S. stocks ended in negative territory on Thursday as investors, left with no economic data or any sentiment-swaying catalysts, took the opportunity to consolidate ahead of third-quarter earnings season. The S&P 500 and the Nasdaq eased back from Wednesday's record closing highs, but the blue-chip Dow closed with the deepest percentage decline.  "The earnings cycle is upon us and there's a wait-and-see in terms of whether we’ll see the same level of consistency of earnings growth in the coming quarter that we've seen in the last two quarters," said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts. "Couple that with the uncertainty surrounding the lack of data coming out of Washington and how the Fed navigates that, it's natural to see a bit of a pullback." The stock market's pause comes amid a steep rally that has been largely driven by the rise of artificial intelligence technology. The runup has prompted concerns that a bubble is forming, which could be a harbinger of an impending correction. Sunday will mark the current bull market's third anniversary; the benchmark S&P 500 touched the nadir of its current market cycle on October 12, 2022 on the heels of monetary tightening from the Fed. Over that time period, while tech and tech-adjacent megastocks have driven the index nearly 90% higher, history suggests the current bull market has more gas in its tank.  The U.S. government shutdown entered its ninth day, with few signs of progress. Consequently, market participants continue to be deprived of essential economic data. And with the start of third-quarter earnings season just days away, the scarcity of market-moving catalysts is focusing investors' attention on remarks from monetary policymakers for clues regarding the central bank's rate cut intentions through the end of the year. New York Federal Reserve President John Williams favors more interest rate reductions before year-end due to risks facing the weakening labor market, he said in an interview with the New York Times published on Thursday. According to preliminary data, the S&P 500 lost 18.50 points, or 0.27%, to end at 6,735.22 points, while the Nasdaq Composite lost 18.75 points, or 0.08%, to 23,023.95. The Dow Jones Industrial Average fell 238.58 points, or 0.51%, to 46,363.20. On Tuesday of next week, JPMorgan Chase, Goldman Sachs, Citigroup and Wells Fargo are slated to report quarterly results, marking the unofficial launch of third-quarter earnings season. Analysts currently predict year-on-year S&P 500 earnings growth of 8.8% in the July-September period, weaker than the second quarter's 13.8% and the year-ago quarter's 9.1% annual growth, according to the most recent data from LSEG. Delta Air Lines advanced after it provided an upbeat forecast for the current quarter, after posting stronger-than-expected third-quarter earnings.  Other U.S. carriers also gained, boosting the S&P 1500 Airlines index.  U.S. retailer Costco Wholesale rose after reporting September sales data. Shares of Albemarle gained ground after brokerage TD Cowen raised its price target on the lithium producer and as China tightened export controls on rare earths. (Reporting by Stephen Culp in New York; Additional reporting by Lewis Krauskopf in New York and Niket Nishant and Sukriti Gupta in Bengaluru; Editing by Matthew Lewis)

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By Caroline Valetkevitch NEW YORK (Reuters) -Major stock indexes eased on Thursday, while the dollar climbed to its highest level against the Japanese yen since mid-February as investors weighed the outlook for Japan's fiscal policies.  Stocks have been mostly rising in recent sessions, with the S&P 500 hitting a record closing high on Wednesday, despite an ongoing U.S. government shutdown and political risk in Japan and France that has made investors nervous.     The euro was also down again against the dollar on Thursday.  Oil prices fell, with investors weighing a ceasefire deal in Gaza that could ease Middle East tensions against stalled peace talks in Ukraine. Safe-haven demand and a weaker dollar drove gold above $4,000 an ounce for the first time this week. Spot gold was last down 1.6% at $3,973.10. The newly elected leader of Japan's ruling party, Sanae Takaichi, said she did not want to trigger excessive declines in the Japanese currency. The dollar briefly eased against the yen after the comments. The greenback was last up 0.24% at 153.04 yen after earlier reaching 153.21, the highest since February 13. In the U.S., the federal government shutdown, which began last week, has left investors without key economic reports.  Despite Thursday's weakness, the stock market remains buoyant, said Adam Sarhan, chief executive of 50 Park Investments in New York, adding that stocks could weaken if the government shutdown lasts for a substantial period of time. "We're in a very strong bull market that refuses to fall in a meaningful fashion," he said. "I'm expecting a pullback at some point but for now the environment is very strong." The Dow Jones Industrial Average fell 297.20 points, or 0.63%, to 46,306.65, the S&P 500 fell 27.40 points, or 0.40%, to 6,726.41 and the Nasdaq Composite fell 62.14 points, or 0.27%, to 22,981.65. JPMorgan Chase CEO Jamie Dimon said there was a heightened risk of a significant correction in the U.S. stock market within the next six months to two years, citing factors including geopolitical tensions, government spending and remilitarization around the world. MSCI's gauge of stocks across the globe fell 4.38 points, or 0.44%, to 991.73.The pan-European STOXX 600 index ended 0.43% lower, dragged down by steep losses in HSBC and Ferrari. French bonds held on to gains from the day before on optimism the country can avoid a snap election. French President Emmanuel Macron’s office said on Wednesday he would appoint a new prime minister within 48 hours.   France's 10-year bond yield was 0.2% higher on the day at 3.529%. The euro was last down 0.64% at $1.1552. U.S. crude futures fell $1.04 to settle at $61.51 a barrel and Brent declined $1.03 to settle at $65.22. The yield on benchmark U.S. 10-year notes rose 1.5 basis points to 4.146%, from 4.131% late on Wednesday. (Additional reporting by Elizabeth Howcroft in Paris, editing by Ed Osmond, Kirsten Donovan, Nia Williams and Aurora Ellis)

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