Why Enterprise Software Stocks Snowflake, Datadog, and Twilio Fell 2% Today

Shares of enterprise software stocks dipped Monday in the wake of last week's rally. Shares of Snowflake (NYSE: SNOW), Datadog (NASDAQ: DDOG), and Twilio (NYSE: TWLO) were down 2.3%, 2.1%, and 1.9%, respectively, as of the close of trading. The Nasdaq Composite Index fell just 0.7% on the day.

Tech stocks in general took a beating in mid-June after the Federal Reserve hiked its short-term interest rate by 0.75 percentage points -- its largest single-step jump since 1994. In fact, the Fed's aggressive interest rate policy throughout 2022 thus far has been a primary driver of the stock market's decline. Higher interest rates generally lower the present value of risk assets like stocks.

High-growth companies that generate minimal profits (or losses) are particularly susceptible to this interest rate effect. It has therefore been tough going for Snowflake, Datadog, Twilio, and other enterprise cloud software stocks this year.

Source Fool.com