Today’s been a rocky one for some of the best-performing tech stocks on the market. For investors in DigitalOcean (NYSE:DOCN) and DOCN stock, this certainly appears to be the case.
Currently, shares of DOCN stock are down by a whopping 18%. This move comes as the Dow Jones Industrial Average inches higher, and as investors take on a generally bullish tone.
One might think this bullish sentiment would bleed into the high-growth tech space. There, DigitalOcean is among the leading cloud computing stocks that investors have looked to for big gains. In the year to date, shares of DigitalOcean are up nearly 150%.
However, for high-flying growth stocks, particularly those in the technology space, there’s some deep red showing up on the charts.
A near-20% move in any stock is certainly worth diving into. Let’s discuss what may be behind today’s price action in DOCN stock.
DOCN Stock Sinks as Valuations Take a Hit
As we reported previously, concerns around bond yields and other macroeconomic valuation drivers appear to be moving these stocks today. This comes after President Joe Biden officially reappointed Federal Reserve Board Chair Jerome Powell to the post. This appointment was met with mixed emotion from the markets. Treasury yields surged higher, taking various highly valued tech stocks lower.
For investors unfamiliar with this historical pattern, higher Treasury yields tend to correlate to weakness in high-growth tech stocks. That is because higher yields suggest that future earnings will come at a discount. Higher yields can also suggest a rotation from growth stocks into value stocks.
Given the relatively little news surrounding some of the biggest losers in the stock market today, it appears mainly these macroeconomic forces are at play. However, it should be noted that Asana and DigitalOcean are similar in that both stocks have skyrocketed this year. Investors looking for a reason to sell and take profits have one today. And sometimes, that’s all it takes.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.