Stocks that soared during the pandemic rally were among the biggest losers in this year’s downturn, a reversal that signals investor worries about the valuations of many risky assets and the general outlook for inflation and growth.
After the S&P 500 plunged in early 2020 following international shutdowns, big companies in the tech and consumer discretionary sectors sent the value-weighted index on a historic rebound that culminated with a record close on January 3 of this year.
Since then, the benchmark has fallen 22%, closing Monday in a bear market. The conditions behind the slippage contrast sharply with those of the bull run that preceded it.
Despite this year’s fall, eight of the 11 S&P 500 sectors remain up from the index’s pre-pandemic peak on Feb. 19, 2020, at Monday’s close.
Energy stocks posted the biggest declines at the start of the pandemic, after demand for crude oil cracked. But the sector has gone from worst to first, rising more than 50% since the pre-pandemic peak of the S&P 500.
The tech sector fell sharply during the current bear market, but is still up 21% from February 19, 2020.
S&P 500 performance by sector, change from February 19, 2020 pre-pandemic high
January 3, 2022
Closing of registration
Energy was the only sector that rose during the slide into a bear market.
February 19, 2020
S&P 500 pre-pandemic high
March 23, 2020
Weak pandemic
The energy sector was the hardest hit during the 2020 bear market.
January 3, 2022
Closing of registration
Energy was the only sector that rose during the slide into a bear market.
February 19, 2020
S&P500
pre-pandemic top
March 23, 2020
Weak pandemic
The energy sector was the hardest hit during the 2020 bear market.
January 3, 2022
Closing of registration
Energy was the only sector that rose during the slide into a bear market.
February 19, 2020
S&P500
pre-pandemic top
March 23, 2020
Weak pandemic
The energy sector was the hardest hit during the 2020 bear market.
Energy was the only sector that rose during the slide into a bear market.
January 3, 2022
Closing of registration
February 19, 2020
S&P500
pre-pandemic top
March 23, 2020
Weak pandemic
The energy sector was the hardest hit during the 2020 bear market.
Energy was the only sector that rose during the slide into a bear market.
January 3, 2022
Closing of registration
February 19, 2020
S&P 500 pre-
high pandemic
March 23, 2020
Weak pandemic
The energy sector was the hardest hit during the 2020 bear market.
The communications services industry is down from its pre-pandemic level more than any other S&P 500 sector. It includes some of the hottest Covid trades, such as Netflix Inc.,
whose stock price plummeted after announcing it lost followers in the first quarter, and Facebook’s parent company, Meta Platforms Inc., which has fallen more than 50% this year.
Market pain spread to retail businesses last month after Walmart earnings reports Inc.
and target Corp.
showed that rising costs were eating away at profits. That fueled investor fears about the ability of some of the nation’s biggest companies to ride out the highest inflation rates in decades.
The Federal Reserve faces the challenge of reining in that price rise with a “soft landing,” a term used to describe easing high inflation without causing a recession.
“Growth has to come down, that’s what has to happen for inflation to come down,” Federal Reserve Chairman Jerome Powell said in an interview with The Wall Street Journal last month. “There may be difficulties in restoring price stability, but we believe we can maintain a strong labor market.”
The central bank approved an interest rate hike of half a percentage point in May, the largest since 2000.
Further evidence of price pressures reported this month could prompt the Fed to be even more aggressive in its efforts to control inflation. The Labor Department said Friday the consumer price index rose 8.6% in May from the same month a year ago, the fastest pace of price increases since December 1981. Fed officials will gather in Washington on Tuesday for a two-day policy meeting. .
—Peter Santilli and Ming Li contributed to this article.
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