Large-Cap Stocks That Shined During a Turbulent Week

In the tumultuous week of March 31 to April 4, 2025, the stock market experienced significant volatility, with the S&P 500 and other major indices facing steep declines. However, amidst this chaos, several large-cap stocks emerged as winners, showcasing their resilience and potential for long-term growth. Let's delve into the factors that contributed to their success and explore whether these stocks should be part of your investment portfolio.



The Resilience of Large-Cap Stocks

The resilience of large-cap stocks during this challenging week can be attributed to several key factors. One of the most significant contributors was the strong performance of certain sectors and companies within the S&P 500. For instance, the S&P 500 closed higher on Monday, adding 0.55% to finish the session at 5,611.85. This rebound from a six-month low earlier in the trading session demonstrated the ability of large-cap stocks to recover quickly from market downturns. Additionally, the Dow Jones Industrial Average added 417.86 points, or 1%, to close at 42,001.76, further supporting the resilience of large-cap stocks.

Individual company performance also played a crucial role in the market's resilience. Nvidia and Tesla, two of the Magnificent 7 stocks, had been down about 3% at one point but most recently were off about 2% apiece. This recovery from early losses helped pull the market off its lows, demonstrating the influence of individual company performance on the overall market. Similarly, Meta Platforms earlier was off 1% but had erased most of its losses into the final hour of trading, further contributing to the market's resilience.

The performance of specific sectors also played a role in the resilience of large-cap stocks. For instance, the energy sector, represented by companies like Energy Transfer and Dominion Energy, provided passive income regardless of the stock market's performance. This stability in the energy sector helped to offset losses in other areas of the market, contributing to the overall resilience of large-cap stocks.

Historical Performance and Long-Term Potential

To understand the long-term investment potential of these large-cap stocks, it's essential to compare their recent performances to historical trends. Amazon, for example, has consistently shown robust revenue growth and increasing profitability. The company's latest earnings update showed a 10% increase in revenue year over year, with significant growth coming from the Amazon Web Services (AWS) division, which expanded at a 19% rate for the quarter and the full 2024 year. This growth is indicative of Amazon's strong historical performance, where the company has consistently shown robust revenue growth and increasing profitability. The company's operating profit margin has crossed into the double digits, thanks to growth and cost cuts, and AWS accounted for $108 billion of Amazon's $638 billion revenue last year, or 17% of the total. This suggests that Amazon is well-positioned for long-term growth, with a good chance at pushing profit margin closer to 15% of sales over the next decade as the AWS and e-commerce businesses expand.

Similarly, Netflix has a stellar history of overcoming deep market dips. During the subprime mortgage meltdown of 2008, Netflix's stock fell right along with the broader market but recovered significantly. By the spring of 2011, Netflix had posted a 563% price gain, while the S&P 500's total return was up to 4%. This trend continued during the inflation panic of 2022, where Netflix gained 161% in three years, while the broad market index rose by 31%. Netflix's shift into a more mature business model, focusing on profitable growth rather than maximal subscriber growth, suggests that the stock should grow more stable and less volatile over time, regardless of the economic situation. New ideas such as live sports coverage, ad-supported subscriptions, and video games further enhance Netflix's long-term investment potential.



Conclusion

In conclusion, the recent performances of large-cap stocks such as Amazon and Netflix align with their historical trends of strong growth and profitability, indicating that these stocks have significant long-term investment potential. As the market continues to face volatility, investors should consider adding these resilient large-cap stocks to their portfolios to hedge against market downturns and capitalize on long-term growth opportunities.