By Yasin Ebrahim

Investing.com – The S&P 500 eked out a gain Tuesday, as cyclical sectors rallied and tech eased off session lows on dip-buying activity, though rising U.S. Treasury yields weighed on sentiment on the sector.   

The Nasdaq closed at 0.50% after having fallen over 1% in the previous day.

Tech and communications services – growth sectors of the market that tend to include stocks with higher valuation – fell out of favor as rising U.S. Treasury yields weighed on sentiment.

The selloff in tech has been driven by the “re-steepening in the yield curve as the spread between the 2-year and the 10-year Treasury yields moved back to 105 basis points in a relatively short order,” Mark Luschini, chief investment officer at Janney Montgomery Scott, told Investing.com in an interview on Tuesday.

Crowdstrike, DocuSign (NASDAQ :), Peloton Interactive (NASDAQ :), Zoom Video Communications (NASDAQ:), was one of the worst-hit growth names. The latter was further pressured by future concerns.

Zoom Video Communications (NASDAQ 🙂 plunged more than 14% following warnings of slowdown revenue growth. The pandemic-fueled surge to user growth was expected to slow down as workers return to work.

“While we’re positive on Zoom’s strategic initiatives and investments in key growth areas, we find it tougher to like a stock with more sharply decelerating growth and incremental pressure on profitability,” Deutsche Bank said in a note as it slashed its price target on the Zoom to $280 from $350.

Big tech ended mixed, with Apple (NASDAQ:) and Amazon (NASDAQ:) higher, while Microsoft (NASDAQ:), Facebook (NASDAQ:), and Google-parent Alphabet (NASDAQ:) ending lower. The rise in yields is unlikely to stop dip-buying big tech.

“[W]Expectations that seem a bit too high can lead to valuations rising to the point at which names in the top tech companies are more vulnerable to falling share prices. [investors] should use those opportunities to add to positions if they’re underweight or have established positions,” Luschini added.

The broader market was also affected by consumer discretionary, which saw a slump of 12% in Best Buy (NYSE:) after the electronics retailer’s weaker-than-expected holiday comparable sales offset third-quarter results that beat on both the top and bottom lines.

The market’s fundamental concerns such as financials and energy saw gains with a shift away from value to growth.

Oil prices rose and oil prices surged, pushing up energy more than 3 percent. President Joe Biden stated Tuesday that 50 million barrels will be released by the United States from its Strategic Petroleum Reserve. This was despite his statement to Congress saying that the U.S. will also release oil from other countries to lower rising oil prices.

“It will take time, but before long, you should see the price of gas fall where you fill up your tank,” Biden said on Tuesday.