On Monday, investors behaved as they had during the pandemic’s early days, pouring money into so-called stay-at-home stocks, whose business models appear almost tailor-made to thrive despite lockdowns. Shares of Peloton climbed more than 7 percent. Stock in Etsy, which soared last year as consumers sought out homemade masks, jumped 3.2 percent.
Investors also bought shares of Clorox, the grocery chain Kroger, Campbell Soup and the toilet tissue maker Kimberly-Clark. Such consumer staples companies fared extraordinarily well during the worst period of last year’s pandemic panic, as consumers stockpiled essentials.
The pain was especially pronounced in areas such as airlines, pleasure cruise companies and casual restaurant chains — all of which had begun to recover this year as the pandemic first came under control. Norwegian Cruise Line and United Airlines each fell about 5.4 percent. Shares in the office building owner Vornado dropped nearly 4.7 percent, as investors priced in the chance that a return to normal working patterns after the summer could be under threat.
One reassuring data point came on Monday from the National Bureau of Economic Research’s Business Cycle Dating Committee — which formally declares when recessions begin and end. The economic downturn induced by the pandemic was the shortest on record, lasting just two months and ending in April 2020, but that fact wasn’t enough to assuage anxious investors.
They poured their money into government bonds in a rush to safety, pushing bond yields — which move in the opposite direction of prices — sharply lower. The yield on the 10-year note dove to 1.19 percent.
Economically sensitive stocks such as commodities producers, financials and industrial firms led the market lower. Technology stocks also slumped, with the tech-heavy Nasdaq composite index dropping 1.1 percent. The Vix, an index widely known as Wall Street’s fear gauge, soared more than 20 percent, its biggest leap since May.
Just a few weeks ago, the main worry for investors was inflation — the possibility that an economy growing so rapidly would set off a bout of runaway price increases. In particular, investors were concerned that soaring prices would cause the Fed to back away from some of the easy money policies the central bank put in place during the pandemic, which have helped supercharge markets over the last year.