“The consumer is really starting to feel the pressure of inflation, especially the lower-end consumer,” said Stephanie Lang, chief investment officer of Homrich Berg. “It's really starting to affect those businesses not only in overall demand – they’re really seeing a change in behavior, that consumers are shifting away from some of these higher ticket price items and the brand names.”
Shares of Shopify tumbled 14% on news the company will cut 10% of its global workforce. CEO Tobi Lutke said the business has seen a pullback in online spending and that he misjudged how long the pandemic-fueled e-commerce boom would last. Amazon, Block and PayPal, all of which serve online merchants, posted big declines as well.
There were some earnings winners Tuesday, including Coca-Cola, McDonald’s, 3M and General Electric. Some investors, including Lang, remain concerned that if the Federal Reserve continues its goal of lowering inflation, it could mean weaker top lines for corporations.
The central bank began its two-day meeting Tuesday. Investors are expecting a three-quarter percentage point hike to be announced Wednesday afternoon.
