Investors continue to focus on inflationary pressures.
What happened
Shares of e-commerce platform Shopify (SHOP -9.31%) were sliding today, in seemingly insignificant issues pertaining to a particular company. Instead, investors were likely to continue to fear that higher inflation and rising interest rates by the Federal Reserve could destabilize the economy.
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These are not really new concerns for investors, but recent comments by former Federal Reserve chairman Ben Bernanke are likely to cause further concern. Technology stock fell 9.4% at 11:11 a.m. ET.
So what
Investors have become increasingly concerned that the Fed will not be able to pull off the so-called slowdown in inflation as it raises the level of government financing to reduce inflation, which lasts for almost 40 years.
Then today, former Federal Reserve chairman Ben Bernanke said the Fed had waited too long to raise rates. In an interview, he asked why the Fed was delaying responding to inflation and said, "I think if I look back, yes, it was a mistake."
The Fed has already raised prices this year, the latest 50-point increase in early May. The current chairman of the Fed Jerome Powell has indicated that inflation at the same rate is on the table.
High-growth tech stocks like Shopify have recently suffered because investors are concerned that as interest rates rise, borrowing will become more expensive for companies. In addition, inflation and rising bond yields also keep the company's future profits lower than they could in the past.
Now what
The decline of Shopify today could add months of pain to investors. The e-commerce company has dropped by 66% in the last 12 months, and shareholders are no doubt wondering what the bottom line is.
But long-term investors should also keep in mind that the company is in the early stages of mass e-commerce. While there are no guarantees that the stock will return, as its shares are now trading at a much lower level over the past year, some investors may want to consider the long-term potential of the company.
