Original title: prepare for more selling! The surge in interest rates on US debt "scares" US stocks bulls and large technology stocks may be a major drag.

Source: FX168 Continental Station

Market strategists expect more selling in the future after Tuesday's fall in the US stock market, led by technology stocks and large constituent stocks, according to an article on the US consumer news and business channel (CNBC) on Wednesday.

Us bond yields have jumped sharply over the past few days, which has stung the market, especially for growth companies. On Tuesday, the yield on the benchmark 10-year Treasury note reached a high of 1.56%.

(10-year Treasury yield chart Source: CNBC)

Treasury yields have risen sharply since last week after the Fed said it could start scaling back its monthly bond purchases as early as November and hinted that interest rates could be raised later.

On September 22nd local time, the Federal Open Market Committee (FOMC) announced that the target range of the federal funds rate would remain unchanged at 0-0.25%, in line with market expectations. The Fed said it would continue to buy $120 billion of bonds a month until it could move significantly further towards the committee's goal of maximum employment and price stability.

"if progress is roughly in line with expectations, FOMC judges that the pace of asset purchases may slow soon," the FOMC statement wrote.

Federal Reserve Chairman Colin Powell made hawkish remarks on Tuesday, which pushed dollar and Treasury yields sharply higher. Speaking before the Senate Finance Committee on Tuesday, Powell said inflation is likely to remain high in the coming months before easing.

Powell acknowledges that there is a risk that price pressures are too high or persist for too long. Powell said that if persistently high inflation becomes a serious problem, then the Fed will raise interest rates.

On Tuesday, the u.s. s & p 500 closed down 2%, while the Nasdaq fell 2.8%, as technology stocks were heavily concentrated in the index. Ten of the 11 sectors in the S & P 500 fell, while the technology sector fell 2.9%. Energy stocks were the only stocks that rose, up 0.4%.

Katie Stockton, founder of Fairlead Strategies, mentioned that Apple Inc(Apple), Amazon.Com Inc, Facebook(Facebook Inc), NVIDIA Corp (Nvidia) and Microsoft CorpLarge technology stocks such as Microsoft have fallen, ranging from 2 per cent to 5 per cent.

She pointed out that these large technology stocks are "clearly the biggest drag on the stock market", "because they are the biggest, which shakes market sentiment."

Stockton said that these stocks plus Tesla, Inc.(Tesla), which accounts for about 25% of the S & P 500.

Stockton added that she was looking at the S & P's downside target of 4238, the previous support level. The S & P closed at 4352.63 on Tuesday.

(daily chart of the S & P 500 Index Source: FX168)

Sam Stovall, chief investment strategist at CFRA, said he expected another sell-off in U. S. stocks.

Stovall noted that the S & P 500 could test a 200-day moving average of 4128. If it falls to this level, it will be more than 5 per cent lower than the current level and about 10 per cent from peak to trough.

The S & P 500 fell below its 50-day moving average on Tuesday. The 50-day moving average is the average of the closing price for the last 50 trading days, and when the index falls below it, it is regarded as a negative momentum indicator.

(source: CNBC)

Stovall says it is important that large-cap stocks are leading the downtrend.

"if generals start to get shot, it's a sign that everyone is vulnerable, so with technology stocks down 2.5 per cent and interest rates rising, I think there is more downside potential," Stovall said.

Large technology companies and growth companies are sensitive to higher interest rates because their high valuations are based on future growth andCash flow. When interest rates rise, the value of future cash flow is discounted.

Ari Wald, a technical analyst at Oppenheimer, says the fact that big tech companies are selling means that popular large growth stocks are joining many that have fallen sharply.

Wald added: "it didn't spread to large-cap stocks before, but now it has spread to large-cap stocks. We think this is a sign of surrender. "