By David Randall

NEW YORK, (Reuters) – Stocks are trying to rebound from a severe sell-off. Investors will be evaluating a range of metrics in order to determine whether they should buy the rally or continue to decline.

Tech-heavy Index ended Tuesday up 1.4%, after dropping more than 10% during intraday trades before rebounding at the close of the session.

In anticipation of an increasingly hawkish Federal Reserve, yields on U.S. Treasury’s benchmark 10-year U.S. Treasury rose by 20 basis points in this month. They are now at their highest point since January 2020. High yield yields could have an adverse effect on future cash flows and growth stocks such as tech stocks.

Liz Ann Sonders is chief investment strategist. She stated, “We’re entering a time where you will witness really dramatic leadership shifts” and “volatility” in the equity market, as the Fed prepares for raising rates. Charles Schwab (NYSE:).

Historical valuations show that there could be even more negative consequences for growth and tech stocks.

Solita Marcelli (chief investment officer Americas, UBS Global Wealth Management), recently reported that the price-to earnings multiple for growth companies is 15 points more than it is for value stocks. This compares to an average long-term of six points.

Russell 1000 Growth has dropped 3.8% over the past year, while Russell 100 Value is up 1.4%. This index tracks shares in banks, energy companies and other economically sensitive, comparatively inexpensive stocks.

UBS anticipates that the broad market will rise with a year end price target for 5100 on UBS’s, 8.2% higher than Tuesday.

Still, “investors will have to be nimble in 2022, and be aware of any outsize exposure they may have to growth stocks,” Marcelli wrote.

Other analysts are not as bullish. Analysts at BofA Global Research said the nearly 2% decline that the S&P 500 experienced in the first five trading days of January bodes ill for its performance for the rest of the year.

The S&P 500 finishes the year higher nearly 75% of the time, delivering an average return of around 11%, when the first five trading sessions of the year are up.

When the first five sessions are down, the year is up just 52% of the time, with an average return of 1.77%, BoFA’a analysts said in a report. The S&P 500 – where tech-focused stocks have a heavy weighting – rose nearly 27% in 2021 and is down 1.1% so far this year.

Analysts at Cantor Fitzgerald, meanwhile, warned that a “significant sell-off is coming,” in the face of a more hawkish Fed, calling for a pullback of 10% or more by the end of February.

In a note, the authors stated that there are alarming signs such as a steep rise in global yields which has diminished the attraction of equities and an 80 percent jump in margin borrowing among individual investors over two years.

“Equity exposure is at historic highs which means that an equity drawdown will overshoot to the downside,” wrote Eric Johnston, the firm’s head of equity derivatives and cross asset.

Bespoke Investment Group’s analysts keep an eye on technical levels. They noted that the QQQ exchange traded fund, which tracks the , closed in “extreme oversold” territory on Friday, a sign that the index could hit a short-term bottom. According to Bespoke, since 1999 the Nasdaq 100 gained 4.9% over six months after an “extremely oversold” reading.

Jim Paulsen (chief investment officer, Leuthold Group) believes any market selling will be temporary due to the expected strong earnings for the next two quarters

He said, “Whether there is a correction happening right now or later this years, it will most likely be met with solid company fundamentals.”