The technology industry sell-off is intensifying on rising Treasury yields and inflation fears. And because the market is witnessing an investor rotation to stocks with better short-term growth prospects, we think it could be wise to steer clear of wallstreetbets’ (WSB) software company favorites Fastly (NYSE:FSLY) and Sphere 3D (ANY) for now.While multiple fiscal stimulus packages and the Fed’s dovish monetary policy stance are driving the economic recovery, concerns over rising inflation and Treasury yields are driving investors to drop overvalued tech stocks. The 13-year high inflation rate and rising Treasury yields have caused a 5.6% decline in the tech-heavy Nasdaq Composite over the past five days.
As investors rotate to cyclical stocks to capitalize on the economic recovery, the tech sell-off might continue for some time. The relatively low investor interest in the tech industry amid the fast-paced economic recovery is evident in Technology Select Sector SPDR ETF’s (XLK) 2.5% decline over the past three months. Also, the benchmark Nasdaq Composite declined by 5% over this period.
In light of these developments, we believe investors should steer clear of Reddit forum wallstreetbets (WSB) favorite software companies Fastly, Inc. (FSLY) and Sphere 3D Corp. (ANY) until the broader tech industry stabilizes.