What happened
Shares of some growth stocks were spiking today as the broader market indices jumped. Some investors appear to be hopeful that the market has finally reached its bottom and are now looking to put some money back into stocks.
As a result, investors returned to some technology stocks today, helping to lift Shopify (SHOP 0.23%) by 13.5%, PayPal Holdings (PYPL 0.34%) by 5.2%, and Appian (APPN -0.89%) by 7.3% as of 10:30 a.m. ET.
So what
There wasn't any company-specific news driving Shopify, PayPal, and Appian higher today. Investors instead appeared optimistic about the market in general and were snatching up shares in the tech sector.
Image source: Getty Images.
Tech stocks have been especially hurt over the past year, as investors have shied away from smaller, high-growth companies as they search for safer places to put their money. That's caused Shopify's stock price to fall 77%, PayPal to stumble 65%, and Appian to drop 53% over the past 12 months.
But today the broader market was rising as the S&P 500 gained 2.7% and the tech-heavy Nasdaq Composite rose 3.2%.
The optimistic sentiment appears to be in response to the massive sell-off in stocks that came last month, in which the S&P 500 fell 9.6% and Nasdaq Composite dropped 10.2%.
Now what
While there's been some optimism in the market over the past couple of days, Shopify, PayPal, and Appian investors should also prepare for more volatility in the near term.
The Federal Reserve appears committed to hiking interest rates into 2023 in order to tamp down inflation. That could put additional pressure on the U.S. economy and, in turn, hurt Shopify's, PayPal's, and Appian's businesses.
Shopify's e-commerce platform is very dependent on businesses setting up online stores and selling goods to customers. If the economy slows down too much, it'll end up hurting Shopify's ability to continue growing. Already, the company's sales began slowing in the second quarter (ending June 30).
PayPal isn't immune from an economic slowdown either, particularly because the company's underlying business is dependent on digital payment transactions. PayPal beat Wall Street's consensus estimates in the second quarter (ending June 30), but a significant economic slowdown could stunt PayPal's growth.
And finally, while Appian investors are no doubt happy to see the company's share price rise today, this high-growth tech stock could still experience share price swings if investors pivot away from seemingly more risky investments.
This doesn't mean that Shopify, PayPal, and Appian aren't good long-term investments. It just means that a few good days in the market doesn't exactly mean that the worst of the market sell-off is over.
Investors will get more insight into how these companies are doing when they report their next quarterly financial earnings. Shopify has an estimated third-quarter earnings date of Oct. 27, PayPal's estimated date is Nov. 14, and Appian's next quarterly report is expected on Nov. 3.
Until then, investors may want to prepare for some more short-term share price swings.
