‘Day of reckoning’ is coming for high-flying tech stocks, Wells Fargo warns

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‘Day of reckoning’ is coming for high-flying tech stocks, Wells Fargo warns (via TradingNation)

Wells Fargo Securities' Chris Harvey is doubling down on his Big Tech warning, saying a "day of reckoning" is ahead."The premium that you're paying is still exceptionally high," the firm's head of equity strategy told CNBC's "

" on Friday. "We believe that premium has got to compress. Two, we think that the next 25 basis point move in the 10-year [Treasury Note yield] is… up not down."is trending lower. It ended the week at 1.43% on Friday, down almost 17% over the past three months. The drop has been benefitting growth stocks, particularly Big Tech.

But Harvey warns a significant reversal is virtually unavoidable, citing the fundamental economic backdrop. Rising rates will set the stage for a double-digit pullback in momentum growth stocks. He predicts it could happen later this summer or early fall. "The tech companies and the growth companies that are selling at very high multiples," he noted. "Even though they have high growth rates, the high multiples are what's going to do them in."

 

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