What happened
Shares of StoneCo Ltd. (NASDAQ: STNE), a financial technology company, were sliding today as some Treasury yields rose to their highest level in two years.
The tech stock was down by 9% as of 4:10 p.m. ET.
So what
The 2-year Treasury note topped 1% today, the highest it's been in nearly two years. Meanwhile, the 10-year note rose to 1.86% today, its highest level since January 2020.
Image source: Getty Images.
When yield rates rise, it usually puts pressure on high-growth technology stocks because it means that the future profits from these companies will be worth less than they would have been if yields remained lower.
As a result, StoneCo and a lot of other technology stocks fell today. The Nasdaq 100 Technology Sector was down by 3.3% as of this writing and the broader S&P 500 was down by 1.9%.
Now what
StoneCo's falling share price today adds to a very frustrating several months for investors. With today's drop, StoneCo's share price is down 74% over the past six months. Investors weren't happy with the company's third-quarter results (released in November) and pushed its share price down 34% the day the results were reported.
While today's share price drop didn't come from any announcement by StoneCo and nothing has fundamentally changed with its business, investors may want to be cautious before buying this volatile stock. The company's upcoming fourth-quarter results, expected in March, could provide some insight for investors.
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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool owns and recommends Stoneco LTD. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
