CNN —After roaring higher for most of this year, the rally in tech stocks sputtered in August as investors grew increasingly worried about how long the Federal Reserve will keep interest rates high.
Strong economic data in recent months has investors betting that the Fed will keep interest rates higher for longer.
Higher yields also mean companies will need to pay more interest on their debt in the future, eating into future cash flows.
Sustained, lofty yields could particularly pose a problem for tech stocks, which often trade at a premium because of the promise of rapid growth.
Any sell-off in tech could reverberate across the broader market, since those stocks are largely responsible for propelling this year’s rally.
Persons:
Ivana Delevska, Spear, Bryan Mena, CNN’s Gregory Wallace, Julie Hedrick, “ We’re, Read
Organizations:
CNN Business, Bell, CNN, Federal Reserve, Treasury, Nvidia, Devices, Marvell Technology, Gross, Commerce, American Airlines, Association of Professional, Airline