How do interest rates impact tech stocks?

How do interest rates impact tech stocks?

Interest rates can significantly affect tech stocks. When rates rise, borrowing costs increase for companies, which can reduce their growth potential and profitability.

Can you explain why higher interest rates are bad for tech companies?

Higher interest rates can lead to higher costs for financing, which may slow down expansion plans and reduce investment in innovation, impacting future earnings.

What about lower interest rates? Are they always good for tech stocks?

Lower interest rates generally make borrowing cheaper, encouraging investment and spending, which can boost tech stock prices. However, if rates are too low for too long, it might signal economic weakness.

How do investors react to changes in interest rates?

Investors often reassess their portfolios based on interest rate changes. Rising rates may lead them to shift away from growth stocks like tech, while falling rates might encourage more investment in these sectors.