A funny thing happened on the way to the stock market’s retreat.
Stay-at-home stocks that benefitted most from Covid-19 and the ensuing lockdowns, like Etsy, DoorDash, Zoom and DocuSign, were the worst performers this week. It’s the opposite reaction that one might expect as the new Covid omicron variant, which the World Health Organization said poses a “very high” global risk, makes its way around the world.
The sharp selloff suggests investors are betting that, no matter what happens with omicron, the U.S. is done with the shutdowns that boosted food delivery and streaming TV services while forcing people to collaborate remotely for work and chat endlessly by video with friends and family members.
Shares of pandemic darling Zoom slumped 16.5% for the week, hitting a new 52-week low on Dec. 3 of $177.12 a share, a 69% drop from its record high in October 2020. Shares of online marketplace Etsy, which became a haven for mask buyers early in the pandemic, fell 20.6% for the week, while food delivery service DoorDash slumped 16%, Roku dropped 13%, Shopify slid 10.5% and Netflix fell 9.5%.
Meanwhile, e-signature software maker DocuSign, which tripled in value last year, tanked 42% on Friday after the company’s weak fourth-quarter guidance indicated “the pandemic tailwinds came to a much faster than expected halt,” JPMorgan analyst Sterling Auty wrote in a note to clients.
There was plenty of pain to go around across the tech sector. The Nasdaq Composite plummeted more than 1.9% on Friday, leaving it down 2.6% for the week for its fifth-worst week of the year. A disappointing jobs report to end the week coupled with omicron concerns led to the Friday downturn.
But some of tech’s blue-chip names withstood the pressure. Apple, HP and Cisco all turned in gains for the week, as investors seeking cover from the market’s volatility rotated out of riskier, high-multiple stocks and into cash-generating companies that pay dividends.
Earlier in the week, Federal Reserve Chairman Jerome Powell indicated that the central bank is so concerned about escalating inflation pressures that it could begin tapering its bond buying designed to boost the economy.
Following Powell’s remarks on Tuesday, Apple was the only tech stock that was up.
“There’s a flight to quality with companies that you know will weather the storm, not go bankrupt, not have financial distress,” Needham analyst Laura Martin told CNBC.
Apple slipped on Friday but is still up more than 3% for the week. Shares of HP popped about 8% this week and hit an all-time high on Friday. HP CEO Enrique Lore said last week that the company expects to see robust demand for its personal computers for the “foreseeable future” across its segments.
Cisco and Broadcom rose more than 2% this week, and Intel and Qualcomm were up less than 1%.
But for large swaths of tech, the market was a sea of red. Facebook, AMD, Adobe and Tesla all fell by more than 6% for the week, while cloud software vendor Asana, which had been the best-performing tech stock of the year, plunged 36.8%, and Bill.com, another recent outperformer, slid 21%.
Salesforce did its part to contribute to the cloud concerns on Tuesday, when the company issued a weaker-than-expected fourth-quarter forecast. The stock is down 9% this week.
“It’s been a wild one,” said Byron Deeter, a partner at Bessemer Venture Partners who invests in cloud software, in an interview with CNBC’s “TechCheck” on Friday. “You can look at four causes. You can look at omicron. You can look at inflation. You can look at interest rates. And you can look at profit-taking.”
However, Deeter is quick to point out to skeptics what happened last year.
“As a reminder, working from home is actually very good for cloud stocks,” Deeter said. Inflation could be a cause for concern, he said, because “the linkage downstream to inflation certainly could cause a rotation to value stocks and cash-generative stocks over time.”
WATCH: Cloud stocks likely to remain volatile
This article was originally published on CNBC