What happened

Shares of Upstart Holdings (UPST -0.76%), an AI-powered lending platform, jumped in early trading today, likely because of continued optimism about the market from yesterday. But Upstart's shares quickly reversed course as news of the latest inflation data (which wasn't good) set in. 

The fintech stock was down by 5.2% at 11:45 a.m. ET.  

So what

Yesterday, the Bureau of Labor Statistics released its latest data, which shows that the Consumer Price Index rose 0.4% in September, more than the 0.3% estimated by analysts. 

A person looking at a computer.

Image source: Getty Images.

Compounding the bad news today was the fact that a new report released today showed consumer spending was flat in September as consumers felt the effects of rising inflation and higher interest rates.  

All of that economic information combined likely has Upstart investors concerned about the economy. 

Rising interest rates make loans more expensive, and with the Federal Reserve poised to raise rates again at its next meeting (in November) investors are worried that the result could slow down Upstart's business. 

Additionally, if the Fed continues to hike interest rates at an aggressive pace, it could end up causing a significant slowdown of the economy. If that happens, it's likely Upstart's loan business will suffer as well.

Now what 

Investors are still trying to decide whether the market has reached its bottom and whether it's safe to come back to growth stocks like Upstart. 

Long-term investors know that timing the market isn't a wise move and instead should focus on whether they believe in the underlying fundamentals of stocks they're interested in. 

For Upstart shareholders, that may mean holding on to the stock while it experiences continued share price drops in the near term and waiting for investors to return to a more optimistic view of growth stocks.