Inflation Jitters Spark Tech Selloff, Erasing 2021 Gains Again

It’s been a rough ride for tech stocks this year.

In as little as two weeks, the Nasdaq 100 Index has erased its 2021 gains twice. The benchmark plummeted 3.1% Thursday, wiping out its rally for a second time as inflation concerns rattled investors, fueling a selloff in bonds and pummeling U.S. growth stocks.

The S&P 500 didn’t go unscathed with a 1.5% drop.

Earlier this month, Nasdaq 100 fell as much as 11% from its February record high, shedding more than $1.7 trillion in value as a rally in Treasury yields spooked the stock market.

Investors have warned that growth stocks would be among the hardest hit amid a rotation into value as the economy reopens and vaccinations ramp up.

“This selloff in tech is unpleasant, but it’s not near the levels where it’s worrisome,” said Matt Maley, chief market strategist at Miller Tabak + Co. “Valuations are pretty rich and the sector has had a good run since last March, so the selloff can take some of the froth off the sector. Longer-term, there is some room for a further advance.”

The Nasdaq 100 climbed 48% last year as high-flying tech stocks emerged as pandemic winners amid low interest rates and global lockdowns that forced consumers to embrace online shopping and a broader shift to the digital world.