By Yasin Ebrahim

Investing.com – The S&P 500 fell sharply Tuesday, as rising Treasury yields soured investor sentiment on sectors of the market with high valuations like tech.

It fell by 0.3%, while the Nasdaq saw a gain of 0.20% or 70 points.

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 two 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 (NASDAQ), DocuSign(NASDAQ:), Peloton Inter (NASDAQ), Zoom Video Communications (NASDAQ:) were among the most affected growth companies, and the latter was also under pressure from concerns about future growth.

Zoom Video Communications (NASDAQ) plunged more than 17% following warnings of slowdown revenue growth. The pandemic-driven boost 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 including – Facebook (NASDAQ:), Google-parent Alphabet (NASDAQ:), Amazon (NASDAQ:), Microsoft (NASDAQ:) and Apple (NASDAQ:) – was also caught up in the rising rate storm,  but are expected to be bought on the dip.

“[W]The result is that valuations are built up with somewhat unrealistic expectations, to the extent where tech leaders’ names are becoming more susceptible to price drops. [investors] should use those opportunities to add to positions if they’re underweight or have established positions,” Luschini added.

Consumer discretionary also led the sector, paced by a 13% slump in Best Buy after the electronics retailer’s weaker-than-expected holiday comparable sales offset third-quarter results that beat on both the top and bottom lines.

Market concerns, including industrials and financials, saw gains as a result of a shift from growth to value.

Oil prices rose more than 3%, and energy prices rose by more than 3%. However, President Joe Biden said Tuesday that the U.S. would release 50 million barrels from its Strategic Petroleum Reserve along with other oil-consuming countries in an effort to reduce rising prices.

Monday’s statement by OPEC indicated that it will reevaluate its plans for slowing production cuts if oil-consuming countries continue to plan to tap their emergency oil resources.