The stay-at-home trade that thrived during the pandemic market turmoil underperformed on Wednesday as investors rotated out of red-hot technology names amid the reopening of the economy.
Amazon dipped about 0.5% on Wednesday, after hitting record highs last week. Peloton fell 1.5%, while Zoom Video also dropped more than 1% after tumbling as much as 8.5% at one point Wednesday.
These tech stocks had been a bright spot in a market that suffered the worst first-quarter ever and the fastest bear market on record. Investors flocked to those names benefiting from the social distancing restrictions and stay-at home orders amid the coronavirus pandemic. Amazon and Netflix were among the firsts to fully make back its March losses, both up more than 20% this year.
Showing their influence on the overall market, the S&P 500 fell into negative territory briefly because of the losses in stay-at-home stocks. The tech-heavy Nasdaq Composite also trailed the S&P 500 on Wednesday.
"The big theme thus far is another session of aggressive pro-cyclical/value and anti-growth/momentum rotation – the Nasdaq is a huge underperformer," Vital Knowledge founder Adam Crisafulli said in a note on Wednesday.
However, the leadership shifted to the hardest-hit areas of the market. Some of the biggest gainers on Wednesday were cruise-ship operators, retailers and airlines whose profitability is directly tied to the economic reopening.
Retailers Gap and Kohl's climbed more than 14% apiece; Carnival and Norwegian Cruise Line rose 5.9% and 9.7%, respectively; while United and American rose 3.8% and 8.5%.
As of Wednesday, all 50 states have begun to reopen to some extent, two months after the pandemic thrust the country into lockdown. California Gov. Gavin Newsom said Tuesday that most of the state's barbershops and hair salons can reopen with modifications. Nevada Gov. Steve Sisolak said the state is moving into phase two of its reopening plan, which will allow gyms and bars to reopen on Friday, followed by casinos on June 4.
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