Why Shopify Stock Skyrocketed This Week
Shares of Shopify (NYSE: SHOP) closed out the last week of trading up 17%. The e-commerce services company's stock gained ground on the heels of comments from the Federal Reserve's latest meeting suggesting that the central banking body may take a softer approach to future interest rate hikes.
The Fed has been raising interest rates at an aggressive pace in hopes of combatting inflation this year, and the unfavorable macroeconomic conditions have crushed valuations for growth stocks. Recent comments from the central bank's leaders suggested that rate hikes may begin to moderate in the near future, and investors' hopefulness for a potential shift in approach helped spur big gains for Shopify stock over the last week of trading.
With Fed officials indicating that a rate hike this month could come in below the 75 basis-point increases that have been the norm lately, investors poured back into growth stocks. The growth-and-tech-heavy Nasdaq Composite index ended the week up roughly 2.1%, and Shopify stock benefited from the positive market momentum. If the Fed begins shifting to a less hawkish position on interest rates, investors would likely be willing to assign more growth-dependent valuation multiples to stocks and that could support continued bullish momentum for Shopify.
Source Fool.com
