LOS ANGELES (AP) — Technology and internet stocks have led the way for much of Wall Street’s bull market run, propelling the stocks of big names like Apple, Amazon and Google’s parent company sharply higher along the way.
Now those high-flying stocks are at the forefront of a wave of selling as investors fret about the possible impact of a recent surge in interest rates.
Those jitters gave the Nasdaq composite index, which as a high concentration of technology companies, its biggest loss in more than two years Wednesday. It extended its slide Thursday and has fallen 9.6 percent since it set a record high in late August.
Apple, Microsoft, and Netflix have posted steep declines. Amazon and Google-parent Alphabet, respectively the second- and fourth-most valuable U.S. companies, have fallen more than 10 percent from their recent peaks. Facebook, the sixth-largest company, has shed 29 percent since late July.
“The sell-off was perhaps a little overdone,” said Lindsey Bell, investment strategist at CFRA. “A lot of it may have been investors just kind of taking profits in some of the high-flyers of the year that also have high valuations.”
The yield on the 10-year Treasury jumped from 3.05 percent early last week to more than 3.20 percent Wednesday, a seven-year high. It dipped to 3.15 percent today.
Interest rates tend to follow increases in bond yields, eroding profits for companies, which have to pay higher interest-rate costs to borrow money. They also make bonds more attractive investments relative to stocks.
Technology and internet-based companies are known for their high profit margins, and many have reported explosive growth in recent years, with corresponding gains in their stock prices. That’s made them particularly vulnerable to higher interest rates, because it makes the stocks’
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