Shares of the e-commerce platform company Shopify (SHOP -0.24%) were plunging today just one day after its share price soared by double digits. Today's drop was caused by ongoing fears about high inflation and upcoming Federal Reserve interest rate hikes.
As a result, the tech-heavy Nasdaq Composite had slid 2.5% and Shopify's stock had tumbled 10.8% as of 2:44 p.m. ET.
Shopify's share price soared more than 10% yesterday as some technology stocks were rebounding and as some investors bet on e-commerce companies in light of poor financial performance from brick-and-mortar companies earlier in the week.
But Shopify's party certainly didn't last long. Today, the company's stock has given up all of yesterday's gains as investors fear interest rate hikes by the Federal Reserve could tip the U.S. economy into a recession.
Each day it seems that another expert is using the R-word, and today the former economist of the SEC, Larry Harris, said that it's "pretty likely" that the U.S. will end up in a recession.
Harris' comments come as the Federal Reserve is poised to continue to raise the federal funds rate throughout this year in order to get persistently high inflation under control.
The Fed's moves have worried investors and technology stocks, including Shopify, have taken the brunt of the market's sell-off recently. That's because growth stocks are seen as especially risky at a time when investors are looking for safe places to put their money.
The huge share price swing from yesterday to today is just another example of how erratic the market is acting lately.
Shopify shareholders should likely be prepared for more volatility as investors continue to process news about inflation and whether or not the Fed can raise rates without pushing the economy into a recession.