Published on 5 Jan 2022 on Zacks via Yahoo Finance
Investors witnessed the rise in benchmark 10-year Treasury yields on Jan 3 at a pace considered fastest during a new year in the last two decades. The brunt of the rising 10-year yield was borne by the tech-heavy Nasdaq Composite index, which dipped 1.3% on Jan 4 due to weakness in tech stocks.
The reason for this tech market slowdown can essentially be the soaring benchmark 10-year Treasury yields, which went up as high as 1.71% on Jan 4 after standing at 1.51% on Dec 31. Growth sectors like the tech space feel the pain of rising bond yields as the same decreases the relative value of future earnings, making the popular stocks seem overvalued. Tech companies also face hurdles in funding their growth and buying back stocks due to higher rates (per a CNBC article).
Investors willing to be part of the rebounding tech rally can bet on some top-ranked technology ETFs like Vanguard Information Technology ETF (VGT), The Technology Select Sector SPDR Fund (XLK), iShares U.S. Technology ETF (IYW) and First Trust NASDAQ-100-Technology Sector Index Fund (QTEC).