A sea of red has swept the market in recent weeks. Inflationary fears are ramping up, the odds of a Fed rate cut are dwindling, and oil prices are surging as the situation in the Middle East intensifies. What began early in the year as selling pressure concentrated in mega-cap technology and software stocks, driven by growing concerns around AI capital expenditure and competitive moats, has since evolved into a broad market-wide selloff. The layers of fear and uncertainty have taken their toll, with the S&P 500 ETF (NYSEARCA: SPY) closing last week down 1.5% and now sitting almost over 3% in the red for the year.
But it's not all bad news. When fear drives fundamentally sound stocks into oversold or deep value territory, it can also create compelling buying opportunities for patient investors. One way to identify those opportunities is through the Relative Strength Index (RSI), which flags when a stock may be technically oversold. Another is to examine forward P/E ratios relative to sector peers, which can reveal when a stock has been punished beyond what its earnings outlook warrants. With that framework in mind, here are five large-cap stocks worth watching closely as the market selloff deepens.
