Why there is hope for technology stocks despite the turnaround in interest rates

Frankfurt The biggest monthly loss on the US technology exchange Nasdaq since the financial crisis has alarmed investors worldwide. The Nasdaq 100 is down more than 13 percent since the beginning of the year. It lost significantly more than the broad US stock index S&P 500, which lost almost nine percent. Technology stocks also play an important role in the S&P 500 and thus contributed to the loss of the world’s most important stock market index.

According to the usual interpretation, there is one reason above all for the sell-off: the significantly increased bond yields, which anticipate the interest rate turnaround by the US Federal Reserve. But is the connection really that clear?

Lars Kreckel, equity strategist at Leal & General Investment (LGIM), doubts that: “Technology stocks have not always reacted as sensitively to changes in interest rate markets and rising bond yields as they have in recent times.” Over the past 30 years, the correlation is just as often positive as it is been negative.