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Hedge funds are selling tech shares at their fastest pace in a decade

Surging bond yields have triggered hedge funds to sell growth-focused technology shares at a speed not seen in the past decade. The hedge fund community dumped tech stocks in the four sessions between Dec. 30 and Tuesday as interest rates spiked. The four-session tech unloading marked the biggest sale in dollar terms in more than 10 years, reaching a record since Goldman Sachs’ prime brokerage started tracking the data.

Tech stocks are seen as sensitive to rising yields because increased debt costs can hinder their growth and can make their future cash flows appear less valuable. The tech-heavy Nasdaq Composite has sold off more than 3% this week, underperforming the S&P 500, which dipped 1% during the same period. The rate spike in the new year resumed Thursday, with investors assessing the Federal Reserve’s faster-than-expected policy tightening. The yield on the benchmark 10-year Treasury note hit a high of 1.75% during the session, rising for a fourth straight day. The benchmark rate ended 2021 at 1.51%.

 

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