Why American Stocks are So Popular?

The Deep Seek vs. NVIDIA Shockwave

Imagine waking up to the news that up to $1.3 trillion in market value had been wiped out from the US stock market overnight. That’s exactly what happened after Deep Seek’s latest announcement sent shockwaves through Wall Street.

In a dramatic turn of events, NVIDIA’s stock plunged 17%, erasing over $600 billion in market value. The Nasdaq dropped 3.1%, and even the HLAL ETF, which tracks a Shariah-compliant portfolio, saw a decline of 0.8%.

The cause of this chaos? Artificial intelligence (AI).

For years, NVIDIA has been the dominant player in AI hardware, making billions from selling high-powered GPUs and server systems used to train AI models. But Deep Seek’s breakthrough changed everything. Deep Seek unveiled an AI model that runs on smaller, cheaper chips, challenging the long-held belief that only NVIDIA’s expensive hardware could power the AI revolution. Investors panicked, fearing that companies would no longer need NVIDIA’s costly GPUs, triggering a sell-off that rippled across the entire tech sector.

With NVIDIA being one of the top three holdings in the S&P 500, the impact was widespread. Tech companies collectively lost $1 trillion in value, while the broader S&P 500 fell sharply. For investors who have exposure to the US stock market through funds like Wahed’s Shariah-compliant portfolio, the big question was whether this event had any effect on their investments. Unlike conventional funds, Wahed tracks the FTSE index, which does not include NVIDIA, insulating its portfolio from the worst of the fallout.

However, this raises a bigger question: why do investors continue to flock to American stocks despite market crashes, trillion-dollar losses, and economic uncertainty?

The US Stock Market: A Global Financial Powerhouse

Despite occasional turmoil, the American stock market remains the largest and most influential in the world. It accounts for more than 40% of the total global stock market capitalization, far exceeding any other country. The combined market value of companies listed on the New York Stock Exchange (NYSE) and Nasdaq surpasses the next seven largest stock exchanges in the world combined, including those in China, Japan, and the United Kingdom.

The Rise of US Market Dominance

The supremacy of the US stock market did not happen by chance. It was shaped by decades of economic expansion, financial innovation, and investor trust.

After World War II, the United States emerged as the world’s strongest and most stable economy. While much of Europe and Asia focused on rebuilding, the US became the financial engine of the world. The Bretton Woods Agreement of 1944 cemented the US dollar as the world’s reserve currency, ensuring that global trade and finance would be anchored to the American economy.

The post-war boom saw US companies expanding globally, while stock market innovations — such as the introduction of the S&P 500 in 1957 — gave investors a reliable benchmark for market performance. The creation of Nasdaq in 1971 transformed the stock market by giving technology companies a platform to raise capital, leading to the rise of Silicon Valley and the birth of the modern tech industry.

As time progressed, the US stock market proved its resilience. The dot-com crash in 2000, the 2008 financial crisis, and the COVID-19 market collapse in 2020 were all major downturns that could have shattered investor confidence. Instead, the US market recovered stronger each time, reinforcing its reputation as a place that attracts capital.

What is S&P 500?

‍The S&P 500 (Standard & Poor's 500) is a stock market index that tracks the performance of 500 of the largest publicly traded companies in the United States. It serves as one of the most widely used benchmarks for measuring the overall health of the U.S. stock market, consistently delivering significant long-term returns averaging around 12% annually over the past 50 years

The Capital of Capitals

One of the biggest reasons why the US market remains the most attractive for investors is the dominance of the US dollar. The American currency is used in 60% of the world’s foreign exchange reserves, making it the foundation of international trade and finance.

Because of this, global capital always finds its way to US markets. During economic uncertainty, whether caused by geopolitical conflicts, inflation, or recessions — investors worldwide seek refuge in US assets, knowing that the strength of the dollar provides a safety net.

Even economic rivals such as China invest heavily in the US because American markets provide liquidity, transparency, and long-term stability. The flow of foreign capital into US stocks and bonds ensures constant demand, helping to sustain market growth.

With Deep Capital Comes Unmatched Liquidity

Another reason why the US stock market is so attractive is its unmatched liquidity. Liquidity refers to how easily stocks can be bought and sold without causing major price swings, and no other market comes close to the daily trading volume of US stocks.

On an average trading day, the US stock market sees $362 billion in transactions, four times more than all of Europe combined. This deep liquidity allows investors — especially large institutions handling billions in assets — to enter or exit positions without affecting stock prices dramatically.

This high level of liquidity has also fueled the growth of exchange-traded funds (ETFs) providing investors with a wide range of tools to manage their portfolios.

Why liquidity is important to a market?

A highly liquid market means that investors can trade with confidence, knowing that they can always find buyers and sellers. This makes the US stock market the preferred choice for global traders and institutions.

Capital Breeds Innovation

The US stock market dominates globally because it fuels innovation through access to capital. Unlike many markets where businesses struggle to secure funding, the US provides a well-developed financial system that supports startups and growing companies at every stage.

For Wahed, launching in the United Stateswhen it was first founded  was a strategic choice. Many wonder why a Shariah-compliant investment platform began in the US instead of a Muslim-majority nation. The answer lies in access to capital, investor confidence, and an innovation-driven financial system, making it the ideal place to scale and expand globally.

Capital allows businesses to take risks, develop ideas, and bring groundbreaking technologies to market. In the US, funding for research and development (R&D) is abundant, allowing companies to explore innovations without immediate pressure for profitability. Tech giants like Google, Apple, and Amazon invest billions in R&D, leading to advancements in AI, self-driving cars, and next-generation computing.

Beyond research, capital enables risk-taking. Many of today’s biggest companies were once seen as uncertain bets. Without financial backing, firms like Tesla and SpaceX might never have succeeded. Investors in the US understand that trial and error is part of innovation, and they are willing to support ventures with long-term potential.

Attracting top talent is another advantage. The US remains a global hub for skilled professionals because companies offer competitive salaries, cutting-edge research environments, and access to global markets. Industries like AI, biotechnology, and clean energy thrive in the US because they can recruit the world’s best talent.

Even the most revolutionary ideas need capital to scale. Funding helps bring innovations from labs to global markets by supporting production, marketing, and distribution. Without financial backing, breakthroughs like the personal computer might have remained niche products rather than global necessities.

Without capital, innovation remains just an idea. With capital, ideas become products, companies, and industries that shape the future. The US stock market remains attractive because it provides the funding, competition, and infrastructure necessary for innovation to thrive.

Why Investors Keep Coming Back to the US Market?

Even after market downturns, recessions, and geopolitical turmoil, the US stock market remains the first choice for many investors worldwide. One of the most compelling reasons is that some of the world’s most valuable and innovative companies are based in the US.

The largest publicly traded firms — Apple, Microsoft, Amazon, Tesla, and NVIDIA — are all American companies that continue to dominate global industries.

Beyond its dominance in individual companies, the tracking the top companies listed in the US stock market (Indexing) is often leveraged for  consistent long-term returns. Over the past 50 years, the S&P 500 has delivered an average annual return of approximately 12%, making it one of the most reliable vehicles for wealth creation. Investors understand that even after downturns, the market has always recovered, often reaching new all-time highs.

Final Thoughts: The Enduring Appeal of US Stocks

The resilience of the US stock market is built on decades of economic leadership, financial strength, and investor trust. The combination of historical advantages, the global role of the US dollar, deep liquidity, and continuous innovation has ensured that American stocks continue to be a preferred investment option in the world.

For those looking to have a  US stock market investment exposure that is Shariah compliant  and diversified, these are some of the options for you to consider.

Important: Other fund details may change over time. Do verify the most current information from the fund's official website.

🚀 Want to start investing in US stocks the halal way? Begin your journey today with Wahed!