Twilio (NYSE:TWLO) stock closed down more than 7% today without a company-specific catalyst. However, some suspect the plunge was a result of the recently released minutes from the Federal Reserve’s March meeting.
Indeed, today the Federal Reserve released the details of its March meeting, reflecting a quarter-point interest rate increase. This likely spurred an afternoon selloff in tech stocks, especially given Fed Gov. Lael Brainard’s comments on the matter yesterday.
Brainard, generally a champion of low interest rates and nominal monetary policy, issued a stark notice on the Fed’s commitment to lowering inflation.
“Currently, inflation is much too high and is subject to upside risks. The [Federal Open Market] Committee is prepared to take stronger action if indicators of inflation and inflation expectations indicate that such action is warranted.”
What else do you need to know about Twilio’s descent?
TWLO Stock Slides as Tech Sector Tumbles
The Fed’s recent report mostly highlights the possible intensity of future interest rate hikes. The central bank has also hinted at rapidly diminishing its balance sheet, starting as soon as May. Some expect interest rates to rise as much as 2.5% by year-end.
It remains unclear how the market will react to the possibly aggressive tightening of monetary policy. As such, the release of the minutes today hit growth stocks the hardest. Logically so, as growth stocks price in greater future revenue, economic uncertainty of this kind only discounts these future cash flows.
Therefore, Twilio is likely an unexpected victim of a general tech stock pullback hitting the markets today.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
