What happened

Chewy (CHWY -2.48%) investors trailed a declining market this week. The e-commerce specialist's shares fell 10% through Thursday trading, according to data provided by S&P Global Market Intelligence. The S&P 500, meanwhile, dropped 4.6% in that time. Chewy shares are trailing the market so far in 2022 but have recovered somewhat from the lows investors saw in late May.

This week's decline came as Wall Street became more nervous about an impending recession.

So what

The nearly 5% drop in the S&P 500 reflected growing investor fears that the economy will slow or begin contracting in the next few quarters. The Federal Reserve announced another significant boost to interest rates this week, and Wall Street responded with increased selling, particularly with respect to growth stocks like Chewy.

The pet supply industry is famously resistant to recessions. Most of Chewy's sales are tied to non-discretionary products, after all, like pet food. But slowing economic growth would still pressure its sales and earnings. Shares had also jumped through most of October, so Chewy's stock was susceptible to a pullback during the wider market decline.

Now what

The company will announce its third-quarter results in a few weeks, likely by early December. That report might show continued sluggish growth in the wake of pandemic sales gains. But Chewy has also demonstrated an impressive ability to raise prices while still gaining market share.

If the company can maintain that positive momentum, then the stock price will inevitably rebound over the long term. In the meantime, investors can expect continued volatility as Wall Street changes its expectations around economic growth rates over the next few months. A brighter outlook there helped push Chewy's stock higher last month, but a darkening mood among investors sent it lower over the last few days.