Tech and other high-growth sectors often see a negative reaction when interest rates rise. Indeed, higher rates make the future earnings prospects of those companies less attractive to investors.
However, while tech stocks often fall when rates and inflation fears rise, that doesn't always mean the underperformance will last long.
"As interest rates rise, the importance of nearer-term cash flows for valuations rises, resulting in relative underperformance for longer duration stocks, like Tech, at least in the near term," Chris Hussey from Goldman Sachs said in a note on Tuesday.
"Looking further out, this dynamic is unlikely to be sustained, however, as technological disruption and adaption should continue to generate new growth opportunities for investors," he noted.
