Tech Stocks Down as Treasury Yields Reach Highest Level Since 2007

U.S. tech giants Alphabet (GOOGL), Microsoft (MSFT), and Amazon (AMZN) are down in premarket trading on September 15, amid concerns about inflation and higher government bond yields.

The U.S. Treasury yield has climbed to its highest level since 2007, reaching above 5%. This increase is causing investors to worry that oil prices staying above $100 could add to inflation pressure on the economy.

As a result, traders are turning their attention to the Federal Reserve's upcoming two-day meeting, which starts on Tuesday. The market expects a quarter-point rate hike, but higher government bond yields can increase borrowing costs for consumers and businesses while making stocks less attractive compared with bonds.

Strategists at Barclays (BCS) warn that if yields rise sharply due to inflation or concerns about government debt, investors may become more cautious about highly valued tech stocks. They also note that strong earnings have so far helped offset the pressure from higher interest rates, but continued earnings growth may not be enough to support stock prices.