Shares of Salesforce (CRM -0.21%), the cloud-based customer relationship-management company, were sliding this morning as investors grow increasingly pessimistic about high-growth technology stocks. The tech stock was down by 3.1% as of 12:13 p.m. ET.
While there wasn't any company-specific news that caused Salesforce's stock to fall today, some technology investors are exiting their positions in the sector as fears of rising inflation, the war in Ukraine, and economic uncertainty fuel a sell-off. As a result, the tech-heavy Nasdaq Composite was down by 2.9% by mid-afternoon.
Inflation is currently at a 40-year high in the U.S., and the Federal Reserve is attempting to bring it down with a series of interest-rate hikes. The Fed has already issued one rate hike in March and is expected to act even more aggressively in May. Fed Chairman Jerome Powell said recently that a 50 basis-point hike "will be on the table for the May meeting."
Technology investors, including Salesforce shareholders, are concerned that Fed rate hikes could end up slowing down the economy and even spurring a recession. An economic slowdown could end up hurting growth stocks, many of which are in the tech sector, which is why some Salesforce investors are selling their shares today.
With today's drop, Salesforce's stock is down 42% over the past six months and investors looking for some reprieve may have to be more patient.
With inflation stubbornly high, it's likely that concerns about the U.S. economy could be persistent for some time. The war in Ukraine is adding to investors' pessimism, which means that the broader market could remain volatile over the short term.
That doesn't mean Salesforce isn't a good long-term investment. It does mean, however, that shareholders should brace themselves for more potential share-price swings.