Shopify Inc. SHOP shares traded higher on Wednesday driven by overall market strength following the Federal Reserve’s decision to hold interest rates steady.
What To Know: The Fed opted to hold the federal funds rate at a range of 4.25% to 4.50% at its Wednesday meeting, suggesting that the economy remains healthy enough to leave rates unchanged.
The central bank's March statement highlighted that the economy continues to grow at a strong pace and the labor market remains solid, but inflation pressures are still present. The Fed also acknowledged increased uncertainty around the economic outlook, but took a less hawkish stance overall, which appears to have boosted broader markets.
The Fed’s latest economic projections were also a key factor contributing to market movement. GDP growth forecasts for 2025 were revised downward to 1.7%, from an earlier projection of 2.1%.
At the same time, inflation expectations were raised. The core Personal Consumption Expenditures (PCE) price index, which excludes volatile food and energy prices, was adjusted up to 2.7% for 2025, from the previous forecast of 2.5%. This shift in projections pointed to rising concerns about stagflation, which occurs when the economy experiences slow growth combined with high inflation.
Despite the inflation concerns, the Fed's outlook also included expectations for two interest rate cuts in both 2025 and 2026. Fed Chair Jerome Powell also downplayed recent surveys that have pointed to rising uncertainty among households and businesses.
"We think our policy is in a good place," Powell said in a press conference Wednesday.
Shopify announced this week that it will voluntarily transfer its U.S. stock exchange listing from the New York Stock Exchange to the Nasdaq. The company’s shares will commence trading on the Nasdaq on March 31.
Price Action: Shopify shares closed Wednesday up 8.19% at $101.71, according to Benzinga Pro.
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