The losses in market value for the companies listed in the closely watched NYFANG+ index -- which includes 10 highly liquid tech and internet stocks -- now have soared to nearly $1 trillion from their Sept. 7 highs. Tesla Inc. is the only stock in black during that period.
The rise in yields has pressured tech names, as investors calculate that future earnings gains will be less valuable amid higher rates. The 10-year Treasury yield is currently around 1.49%, up from 1.3% on Sept. 22.
“Yields are likely to be biased higher for the time being as the world (and monetary policy) normalizes and inflation proves more durable than hoped,” the research firm Vital Knowledge wrote in a report. While some tech investors view the decline as temporary, “we think this time is different.”
The tech world exists in a universe of its own where the promise of the future is given a present value that is often exceptionally enthusiastic. Companies are given a great deal of leeway by investors because of low interest rates.Click HERE to subscribe to Fuller Treacy Money Back to top