Why Confluent Stock Is Falling Hard Today
What happened
Shares of Confluent (NASDAQ: CFLT), a data streaming company, were falling today on seemingly no company-specific news. Instead, investors were likely selling their shares as the technology sector in general continued sliding due to economic uncertainty.
The tech stock fell by as much as 12.4% today and was down by 8.2% as of 2:28 p.m. ET.
So what
Today's share plunge comes as investors continue to weigh the potential economic effects of the conflict in Eastern Europe. But tech investors in general have been jittery even before the fighting between Russia and Ukraine began.
Image source: Getty Images.
Technology stocks have been falling lately as some investors have exited riskier growth stocks in search of more stable places to put their money. The tech-heavy Nasdaq Composite is down 11% over the past six months as a result.
Investors have grown increasingly concerned that inflation is at a 40-year high and they're likely worried that higher prices could hamper consumer spending and, in turn, hurt the economy's growth.
The Federal Reserve is expected to raise interest rates this month, and throughout this year, to tamp down inflation. But investors have been concerned that doing so will also impede economic growth.
When investors are concerned about economic growth, riskier stocks -- like fast-growing tech stocks -- look less desirable. That's one reason Confluent's share price has fallen 27% over the past six months.
Now what
Confluent investors should probably prepare themselves for more instability in the market over the coming months. With interest rate hikes on the way, inflation eating away at workers' paychecks, and uncertainty stemming from the conflict in Eastern Europe, it's likely that the market will continue to be erratic.
That doesn't mean that Confluent isn't still a good long-term investment, but it does mean that investors might have to ride out share price volatility in the short term.
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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool owns and recommends Confluent, Inc. The Motley Fool has a disclosure policy.
