Jim Cramer: The stay-at-home stocks are roaring again

"The recovery stocks are handing the baton back to the lockdown winners because lockdown is where we're headed," the "Mad Money" host said. Subscribe to CNBC PRO for access to investor and analyst insights:

The stay-at-home trade has returned to Wall Street despite the U.S. launching its Covid-19 vaccination campaign, revealing some insight into how investors gauge the economic bounce back in the near term, CNBC’s Jim Cramer said Monday.

“The recovery stocks are handing the baton back to the lockdown winners because lockdown is where we’re headed,” the “Mad Money” host said, bemoaning ever-increasing coronavirus transmissions and hospitalizations across the country.

“Nobody wants to shut down the economy … even partially, but with infections exploding, hospitals overwhelmed and a horrifying death toll, even the Covid doubters who think that it was just a hoax are starting to take the virus seriously.”

Health officials on Monday began administering Covid-19 shots developed by Pfizer and BioNTech, marking a big step in global efforts to contain the spread of the deadly disease, but the moment was not enough to keep the reopening trade going during the trading day. As U.S. Covid-19 deaths topped 300,000 and worries about a highly contagious winter continue, investors weighed the likelihood of economic shutdowns.

New York City Mayor Bill de Blasio warned about a potential “full shutdown” in the city that was once the epicenter of the coronavirus pandemic. Indoor restaurant dining ended in the city on Monday. The states of California and Michigan have also reinstated business restrictions in hopes of slowing the virus spread.

On Monday, the S&P 500 extended its losing streak to four days after falling 0.44% to 3,647.49. The Dow Jones industrials index dropped for a third-straight session, giving up nearly 185 points for a 0.62% decline to 29,861.55.

The tech-heavy Nasdaq Composite, which includes many components powering the stay-at-home economy, moved up 0.50% to 12,440.04.

“The market’s saying the good news on the vaccine front is baked in, so it’s time to focus on the bad news of the totally out of control pandemic,” Cramer said. “After weeks of focusing on the vaccine, I think the good news is old news. Now the outbreak’s front and center.”

He noted stocks like Amazon, the ultimate shop-from-home stock, which had a 1.74% gain in the past three months that lags the 7.80% rise in the benchmark S&P in that same timeframe. The internet giant’s stock rose 1.30% on Monday. Shares of Adobe and Twilio, two companies linked to the digital transformation, also posted 2% gains.

The rotation out of the recovery plays and into the stay-at-home stocks was best illustrated by the disparate moves in Disney and Netflix, Cramer said. While Disney competes with Netflix in streaming, the company has a large exposure to the tourism economy as well as the movie industry, contributing to the stock’s more than 3% drop on Monday. Netflix rallied nearly 4% higher.

“I like Disney a great deal,” Cramer said. “I don’t recommend selling it because I expect a vaccine glut by April, but for now home entertainment has edged out the magic kingdom, Netflix.”

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