It was an ugly day in the market today, but Shopify (NYSE:SHOP) fell 7.36% while the S&P 500 dropped 1.43%. What led to this dramatic underperformance? We’ll dive into a few details as to why Shopify got hit so hard on Wednesday.

1. Technology Stocks Got Hit the Hardest

Technology stocks led the losers in today’s market. Alphabet (NASDAQ:GOOGL) fell 9.51% amid fears its cloud business is underperforming. As the day went on, the sell-off in Google led to a broader fire sale in technology stocks. Amazon (NASDAQ:AMZN) fell 5.58%, Meta Platforms fell 4.17%, and NVIDIA (NASDAQ:NVDA) fell 4.31%.

What do all these companies have in common? They’ve seen strong run-ups in their share price so far year-to-date. Generally, fire sales reducing risk in specific sectors (like technology today) will hit stocks that have appreciated the most during rallies.

2. The Fintech Sector is Issuing Warnings Signs

You may have never heard of Worldline, it’s a payment processor based in France. However, its results were bad enough to spook the broader fintech space. The company reported organic sales for the year would come at 6% to 7% growth versus a forecast that previously was set at 8% to 10%.

Believe it or not, that reduction in outlook caused the company to crash an astounding 59%. Specifically, the company cited macroeconomic challenges in countries like Germany.

Shopify isn’t really a fintech company (though it has products in the space), but it does record 16% of its sales from the EMEA region (which includes all of Europe). Both it and Amazon will see their share prices react in pretty outsized ways to evidence that consumer spending is dipping below expectations.

3. Interest Rates Remain Elevated

Rising interest rate expectations have brought many stocks to their knees over the past couple of months. With treasuries yielding more than 5%, it’s harder to make a case that owning risky assets is a good idea.

One example of high interest rates? Mortgage rates hit their highest level in 23 years today. Today was the Nasdaq Composite’s biggest loss since February, and the index officially finished in correction territory. Thankfully, there are some bright spots after hours. Meta Platforms released strong earnings. Whether that is enough to turn the tide on negativity tomorrow remains to be seen.

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