Traders are shunning technology stocks amid mounting risks from soaring Treasury yields and hawkish commentary from the Federal Reserve. 

The Nasdaq 100 Stock Index fell 2.4% Monday, adding to losses sustained last week that have erased over $1 trillion in market value from the tech-heavy benchmark in the past five sessions. Microsoft tumbled 3.9%, its worst decline in more than a month. Chipmaker Nvidia sank 5.2%, extending losses sustained over the past five sessions to 20%. The stock hasn’t had a five-day run this bad since March 2020. 

“There’s so much pessimism,” said Kim Forrest, chief investment officer and founder of Bokeh Capital Partners. “The war in Ukraine, higher interest rates, recession fears, China’s COVID lockdowns and then oil prices — it’s all very gloomy.”

Those macroeconomic risks are causing even some of the most outspoken bulls to grow more cautious. JPMorgan Chase & Co.’s Marko Kolanovic advised clients to take some profits, citing risks from geopolitics and Fed tightening, just a month after he advised adding to stock holdings.  

Kolanovic may be onto something, however, as the latest bout of selling comes after a three-week rally that sent the Nasdaq soaring 16% from a March 14 low as investors snapped up growth stocks amid optimism that they would be well-positioned to outperform as economic growth slows. Now, that optimism has been replaced by fear that an aggressive Fed bent on fighting inflation at all costs will send the economy into a recession.

Fed board member Christopher Waller acknowledged those risks Monday, saying that interest rate hikes are a “brute-force tool” that can cause “collateral damage.”


The Fed raised its key rate by a quarter point last month and signaled it expects to lift it to 1.9% by the end of 2022 as the central bank seeks to bring inflation under control. Officials have said they’re open to moving faster if needed, including by hiking a half point at the central bank’s May meeting. Higher interest rates reduce the present value of future earnings, weighing especially on shares of fast-growing companies whose profit potential isn’t expected to be realized for years.

“This is a tough environment to want to hold onto risk and that might remain the case until investors believe the Fed may not be as aggressive with tightening policy,” Edward Moya, senior market analyst at Oanda, wrote in a note to clients. “The Fed has locked itself into delivering a couple massive rate hikes and the earliest they could flip-flop and ease up on tightening as growth concerns become a priority is the middle of the summer.”

In January, a whopping $3 trillion was wiped out by the time the rout bottomed out, while February and March were relatively better, seeing sell-offs of $1.7 trillion and $1.5 trillion, respectively. Companies in the index have a combined market value of $16.9 trillion, led by Apple, Microsoft and Amazon.

Earnings can’t come fast enough for investors like Bokeh Capital’s Forrest, which believes that spending on technology remains robust and will hold up relatively well even in a downturn. 

“I’m expecting earnings and commentary to put the focus back on strong fundamentals,” she said.

Microsoft Philanthropies underwrites some Seattle Times journalism projects.