Nasdaq Sells Off From Record Highs as Treasury Yields Surge — But These Stocks Hit Buy Points

The Quick Take

• Nasdaq sells off from record highs as Treasury yields surge on hot economic data and renewed rate hike fears
• Despite the selloff, select stocks hit new buy points — IBD screens for breakouts during market pullbacks
• The session illustrates the bifurcation between index-level pressure and individual stock opportunity in a rate-repricing environment

The Nasdaq composite retreated from recent record highs on Wednesday as a surge in Treasury yields — driven by stronger-than-expected economic data — triggered a broad technology sector selloff. Investor's Business Daily noted that despite the index-level pressure, a number of individual stocks managed to reach new buy points during the pullback, illustrating that disciplined growth investors can find entry opportunities even as the major averages pull back under rate pressure.

The dynamic of hot economic data translating into yield surges and equity selloffs reflects the current macro paradox: evidence that the U.S. economy is performing strongly tends to reinforce expectations that the Federal Reserve will need to tighten further, which in turn pressures valuations most acutely in long-duration growth equities where the Nasdaq is most heavily concentrated. The stocks that held their buy points through this selloff are likely those with near-term earnings catalysts that outweigh the valuation headwind.

For tactical investors, the IBD framework of watching for buy points during index pullbacks is particularly relevant in this environment. When the macro catalyst for selling is rate repricing rather than a deterioration in corporate fundamentals, the stocks that hold technical levels and reach buy points during the selloff are often the strongest performers in the subsequent rally when rate fears subside. Screening for relative strength during this pullback may yield the best-positioned names for the next leg higher.

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