Major Moves Mean Major Gains for Large Caps

Core Viewpoint - NVIDIA Corp's stock has significantly increased in value since the start of 2023 but experienced a sharp decline of 10% in a single day, resulting in a loss of approximately $212 billion in market capitalization, which is larger than the market caps of companies like Adobe, Walt Disney, and McDonald's [1] Group 1: Stock Performance After Large Losses - Stocks that have lost at least $50 billion in a single day tend to perform well in the following months, with an average return that outperforms the S&P 500 Index across various timeframes [2][3] - The average return for stocks after such declines was better than the S&P 500 Index at all observed timeframes, from one week to one year later [2][4] - Approximately 54% of the time, stocks outperformed the S&P 500 Index three months later, but this percentage decreased to 42% and 46% at six and twelve months, respectively [3] Group 2: Comparative Returns - If an investor had chosen to buy the S&P 500 Index instead of the stock after a significant loss, the average return over the next three months would have been only 6.25%, compared to an average gain of 13% for the stocks [5][6] - Stocks that gained at least $50 billion in market capitalization on a 10% move or more typically saw better performance if purchased after a week of the initial gain, rather than immediately [7] - After a significant gain, stocks averaged a loss of 1% in the first week but gained an average of 10.6% six months later, with a one-year return averaging 14.7% compared to 8.6% for the S&P 500 [7]