Despite recovering from pandemic-induced lows last year, the industrial and manufacturing sectors face huge pressures from multi-year high inflation, deepening supply chain constraints, and the recent resurgence of COVID-19 cases. This, along with the ban on oil and gas imports from Russia, has been leading to surging oil prices, which is an early indication of a recession. Investors’ worries over these factors have been causing immense volatility in the stock markets lately.
As investors seek ways to dodge the market volatility, which is not expected to end soon, betting on large-cap stocks in the energy and metals industries could be wise now, owing to their ability to generate stable returns and profit during inflationary periods. With nations trying to ease supply chain bottlenecks, boost domestic production, and focus on infrastructure projects now, large-cap stocks with better exposure and wide market reach should benefit more than their smaller counterparts in the coming months. Investors’ interest in large-cap stocks is evident from the SPDR S&P 500 Trust ETF’s (SPY) 5.5% returns over the past month.
