{"id":29318,"date":"2025-08-20T10:28:55","date_gmt":"2025-08-20T10:28:55","guid":{"rendered":"https:\/\/www.vtmarkets.com\/?p=29318"},"modified":"2025-08-20T10:28:55","modified_gmt":"2025-08-20T10:28:55","slug":"us-tech-earnings-vs-rising-yields","status":"publish","type":"post","link":"https:\/\/www.vtmarkets.com\/en-ca\/featured\/us-tech-earnings-vs-rising-yields\/","title":{"rendered":"US Tech Earnings vs Rising Yields"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"559\" src=\"https:\/\/www.vtmarkets.com\/en-ca\/wp-content\/uploads\/sites\/13\/2026\/03\/20250404-181023-1024x559.jpg\" alt=\"\" class=\"wp-image-19978\" \/><\/figure>\n\n\n\n<p>The US tech sector has been a driving force behind much of the stock market&#8217;s post-pandemic recovery, with the Nasdaq outperforming global indices thanks to gains from the major tech giants.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">US stocks ended higher, with the S&amp;P 500 and Nasdaq hitting record closing highs for the second straight day, buoyed by increasing confidence that the Fed was getting closer to cutting interest rates <a href=\"https:\/\/t.co\/UzdBHHEXsL\">https:\/\/t.co\/UzdBHHEXsL<\/a> <a href=\"https:\/\/t.co\/DVtsfbJ0U0\">pic.twitter.com\/DVtsfbJ0U0<\/a><\/p>&mdash; Reuters (@Reuters) <a href=\"https:\/\/twitter.com\/Reuters\/status\/1955830488100409563?ref_src=twsrc%5Etfw\">August 14, 2025<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>However, a growing disconnect is emerging between lofty valuations and mounting macroeconomic headwinds. Most notably here is rising real yields.<\/p>\n\n\n\n<p>As bond markets reprice expectations around inflation and future Federal Reserve policy, both traders and investors are now asking: what comes next for the Nasdaq?<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Real Yields vs Long-Duration Stocks<\/h2>\n\n\n\n<p>Real yields\u2014nominal bond yields adjusted for inflation\u2014have climbed steadily over the past 12 months. The 10-year US Treasury real yield recently surpassed 2.2%, its highest level since 2008. This rise poses a direct challenge to high-growth equities, particularly tech stocks, which are classified as long-duration assets. Their valuations depend heavily on future earnings, which are worth less in present value terms as real yields rise.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">Bond traders\u2019 big bet that the Fed is poised to lower interest rates faces a key moment this week as Chair Jerome Powell gets a chance to weigh in on the economy <a href=\"https:\/\/t.co\/Ew5FQmtnH7\">https:\/\/t.co\/Ew5FQmtnH7<\/a><\/p>&mdash; Bloomberg (@business) <a href=\"https:\/\/twitter.com\/business\/status\/1957081504380559681?ref_src=twsrc%5Etfw\">August 17, 2025<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>As a result, companies like Nvidia, Microsoft, and Apple become more susceptible to sell-offs. Historically, this environment leads to valuation compression, where stock prices decline despite continued revenue growth.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Why Tech Is Vulnerable Now<\/h2>\n\n\n\n<p>The tech sector&#8217;s outperformance has been supported by powerful tailwinds: low interest rates, abundant liquidity, and surging demand for cloud computing, AI, and digital infrastructure.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">Without the billions to spend on AI, small-cap tech stocks are losing out to the megacaps <a href=\"https:\/\/t.co\/vGws69sECV\">https:\/\/t.co\/vGws69sECV<\/a><\/p>&mdash; Bloomberg (@business) <a href=\"https:\/\/twitter.com\/business\/status\/1956310166955073850?ref_src=twsrc%5Etfw\">August 15, 2025<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>But with inflation proving sticky and the Fed hesitant to ease policy, those assumptions are now being challenged.<\/p>\n\n\n\n<p>Many analysts argue that the Nasdaq looks overstretched. It currently trades at a forward P\/E ratio of around 27\u201328x, well above historical norms.<\/p>\n\n\n\n<p>Additionally, the top seven stocks now account for over 50% of the Nasdaq\u2019s total market capitalisation, making the index increasingly dependent on the performance of just a handful of companies. In such a concentrated environment, even minor earnings disappointments can trigger outsized price declines.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Earnings Strong, Reactions Muted<\/h2>\n\n\n\n<p>Recent earnings from Alphabet, Meta, Microsoft, and Amazon have generally exceeded expectations, buoyed by strength in cloud services and AI development. However, post-earnings price action has been subdued\u2014if not outright negative\u2014suggesting the good news was already priced in.<\/p>\n\n\n\n<p>Apple\u2019s report is a case in point. Despite beating EPS forecasts and announcing a massive share buyback, concerns over iPhone demand and its exposure to China limited investor enthusiasm. This reflects a market that has become both forward-looking and increasingly cautious.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Macro Risks and Yield Pressure Build<\/h2>\n\n\n\n<p>Beyond earnings, broader macro risks are adding pressure. Core PCE inflation remains above 2.5%, keeping rate cut expectations at bay. Trade and tariff tensions\u2014especially involving China and India\u2014have also resurfaced under the Trump administration, adding further geopolitical uncertainty.<\/p>\n\n\n\n<p>These dynamics make it harder to justify the Nasdaq\u2019s valuation premium. High-growth names face growing scrutiny as yields climb and political risks mount.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Technical Fatigue and Sector Rotation<\/h2>\n\n\n\n<p>From a technical perspective, the Nasdaq is showing early signs of fatigue. After a rally of more than 25% year-to-date, momentum indicators for many tech leaders have turned neutral or bearish. Meanwhile, rotation into cyclicals and small caps is gaining momentum, driven by optimism around improving US GDP growth.<\/p>\n\n\n\n<p>At the same time, the bond market is flashing caution. The combination of rising real yields and equities has historically preceded market corrections\u2014a warning traders should not ignore.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">What Traders Should Be Watching<\/h2>\n\n\n\n<p>If real yields continue pushing toward 2.5%, tech valuations may face sharper repricing. Any hawkish messaging from upcoming Jackson Hole speeches or <a href=\"https:\/\/www.federalreserve.gov\/monetarypolicy\/fomccalendars.htm\" target=\"_blank\" rel=\"noopener\" title=\"\">FOMC minutes<\/a> could also trigger rotation out of growth stocks. Meanwhile, tech companies will need to continue beating earnings expectations just to justify current multiples.<\/p>\n\n\n\n<p>Watching sector ETF flows can offer further insight. <a href=\"https:\/\/www.nasdaq.com\/articles\/qqq-goog-tmus-isrg-etf-outflow-alert\" target=\"_blank\" rel=\"noopener\" title=\"\">Outflows from QQQ<\/a> (tech-heavy ETFs) alongside inflows into IWM or value-oriented ETFs may confirm a broader market rotation.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Opportunities Still Exist<\/h2>\n\n\n\n<p>Despite growing risks, the tech sector isn\u2019t without strengths. US firms continue to lead in AI innovation and capital investment. Companies with strong free cash flow and pricing power may be better positioned to withstand the tightening cycle.<\/p>\n\n\n\n<p>If inflation moderates faster than expected, the Fed could begin easing earlier in 2026, potentially providing tech with a second wind. In the meantime, selective exposure to high-quality, fundamentally strong names remains a valid strategy.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Conclusion<\/h2>\n\n\n\n<p>The Nasdaq has enjoyed an extraordinary run, but the macro environment is shifting. With real yields climbing and earnings expectations high, complacency is no longer an option. Traders should remain dynamic\u2014emphasising disciplined positioning, broader sector diversification, and close monitoring of bond market signals.<\/p>\n\n\n\n<p>This is not the time to chase. It\u2019s the time to prepare.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>As bond markets reprice expectations around inflation and future Federal Reserve policy, both traders and investors are now asking: what comes next for the Nasdaq?<\/p>\n","protected":false},"author":64,"featured_media":25586,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[25,28],"tags":[29],"class_list":["post-29318","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-learn","tag-learn"],"acf":{"acf_article_selection_author":""},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/29318","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/64"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=29318"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/29318\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/25586"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=29318"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=29318"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=29318"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}