What happened

The stock market was having a rough day on Tuesday, with all three major averages deep in the red and the tech-heavy Nasdaq down by more than 1.5% at 1 p.m. ET.

Fintech giant Square (NYSE:SQ) was an underperformer, with shares down by more than 3%, but equally notable is the fact that Square was up by more than 2% earlier in the session.

People on a roller coaster.

Image source: Getty Images.

So what

There are two conflicting market dynamics impacting Square, and most other high-growth tech companies for that matter.

For one thing, the newly discovered omicron variant of COVID-19 is a generally positive catalyst for anything considered to be a "stay-at-home" stock. During other waves of COVID, Square gained users (especially in its Cash App), and while payment processing at its merchant businesses suffered, the financial technology company was generally a net beneficiary of the pandemic, business-wise.

On the other hand, Federal Reserve Chair Jerome Powell scared the market with commentary indicating that the Fed may start to taper its bond-buying program and could potentially start raising interest rates to combat inflation. Without getting too deep into an economics lesson, rising rates are typically bad for highly valued growth stocks.

Now what

The key takeaway is that there's increased uncertainty surrounding Square's business. It's too early to tell what impact (if any) omicron might have, or if the Fed will actually need to start getting aggressive with its monetary policy. But for the time being, investors are more nervous than they were, and that's what seems to be weighing on the stock today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.