A hawkish message from Federal Reserve Chairman Jerome Powell might bring a new dimension to the battle between tech stocks and Treasury yields. Asset managers who once once more flocked to U.S. mega-cap stocks might take a hit.
Chairman Powell speaks at the Kansas City Federal Reserve Bank’s annual symposium in Jackson Hole, Wyoming, on Wednesday.Lectureand expressed determination to continue raising interest rates to curb inflation. As a result, on the same day in the US stock market, the Nasdaq 100 index, which is centered on high-tech stocks, plunged 4.1%.
Portfolio managers, including long-term tech bulls, see further downside risk in interest-rate-sensitive tech stocks. They are wary of Chairman Powell’s policy “threat” in the face of high prices around the world.
Some investors are bracing for the possibility that the 10-year Treasury yield will retest the 3.5% level it approached in June and climb further to 4%. That would be another blow to tech stocks, which have rebounded more than 20% from the bottom of the bear market.
“If yields spiked once more to 3.5%, it would shake the market, especially tech stocks,” said Nancy Tengler, chief investment officer at Laffer Tengler Investments. “At 4%, the whole stock market will change and recalibrate,” she said.
White: Nasdaq 100 Index, Blue: 10-year US Treasury yield
news-rsf-original-reference paywall">Original title:
news-rsf-original-reference paywall">Just as Wall Street Piles In, Tech Stocks Face Fresh Rates Storm(excerpt)