Interest Rates and the Nasdaq: Do Rising Yields Hurt Tech Stocks?

Why traders expect a negative link

Growth companies are valued on earnings expected far down the road, and when rates go up, those future earnings are worth less today. The Nasdaq-100 is heavy on exactly that kind of company, so the textbook take is simple: yields up, Nasdaq down.

2022 made that rule feel like a law of nature. The average 10-year yield climbed from 1.47% in December 2021 to 3.62% in December 2022, and QQQ lost 32.6% over the year, dividends included. Since then, every morning brief keeps one eye on the 10-year.

The real question is whether 2022 showed us a permanent rule or just one regime.

Four years that break the rule of thumb

Before we get to correlations, look at calendar years. Here's the average 10-year yield from one December to the next, next to QQQ's total return for the year:

In 2009 and 2013, yields went up by more than a full percentage point and the Nasdaq-100 had one of its best years. In 2022, a similar rise came with one of its worst. In 2023, yields kept climbing and the index gained almost 55%. On its own, the size of the yield move told you very little.

What we found

We compared each month's QQQ total return with the change in the monthly average 10-year yield, from January 2000 to September 2026.

• 2009+54.7%
• 2013+36.6%
• 2022−32.6%
• 2023+54.8%

Exact values from table 2 in this article. Bar lengths share a zero baseline; no new calculation or simulated price path. Read the table and its stated sample and limits in this article.

For two decades, the sign was the opposite of the rule of thumb: rising yields went with rising stocks more often than not. On a rolling 36-month window, the correlation was negative only 23.8% of the time. It peaked at +0.54 in the 36 months to January 2013 and bottomed at −0.55 in the 36 months to June 2024. The latest reading, to September 2026, is −0.14.

The surprise: big yield drops were the worst months

Next, we sorted months by how far the yield moved.

The worst months came when yields fell hard, not when they rose. Most of them hit during stress: the 2000–2002 bear market, late 2007 and 2008, May 2010, December 2018 and March 2020. In those months, investors were dumping stocks and buying Treasuries at the same time. Falling yields were a sign of fear, not a gift to valuations.

Months with big yield increases were weak too, roughly flat on average. The best months were the calm ones.

Why the sign flips

Two different stories move yields, and they hit stocks in opposite ways:

1. Growth scares. When the economy weakens, yields and stocks fall together, and the correlation is positive.
2. Inflation scares. When inflation pushes rates up, yields rise while stocks fall, and the correlation is negative.

From 2000 to 2019, inflation was mostly low and a lot of the big shocks were about growth, so stocks and yields tended to move together. Since 2020, inflation has been the main worry, and the textbook relationship has been in play. Neither regime lasts forever.

What this means if you trade NQ

• Ask which story is moving yields today. Yields going up after a strong jobs report is a different signal from yields going up after a hot CPI print.
• Don't treat a falling yield as automatically bullish. If it's falling because growth data disappointed, the Nasdaq-100 can fall right with it.
• Treat the relationship as a regime, and check it regularly. A rolling correlation over the last few years tells you which story the market is trading.

That's why our pre-market checklist labels yields as "confirming, contradicting or neutral" instead of assuming a fixed sign.

A simple regime check you can run

You don't need a model to know which regime you're in. Once a month:

1. Take the last 36 monthly returns of QQQ and the last 36 monthly changes in the 10-year yield.
2. Compute their correlation in any spreadsheet.
3. If it's clearly negative, the market is trading the inflation story, and rising yields are a headwind. If it's clearly positive, it's trading the growth story, and falling yields are a warning sign.

On our data, that 36-month correlation ranged from −0.55 to +0.54 and spent about three quarters of the time above zero. It moves slowly, which is exactly why it works as a monthly check and not a daily signal.

Reading a yield move on a trading morning

Limits

• Monthly averages. The yield series is a monthly average, not the month-end rate, which smooths out sharp moves inside the month.
• Correlation, not cause. Both series react to the same news. Neither one necessarily drives the other.
• QQQ, not NQ. Same index, but futures prices also reflect a financing rate.
• One country, one period. Results from 2000 on may not describe other inflation regimes.

How we did it

• QQQ monthly prices from Alpha Vantage (TIME_SERIES_MONTHLY), split-adjusted by us for March 20, 2000, with dividends from Alpha Vantage (DIVIDENDS).
• 10-year Treasury constant-maturity yield, monthly average, from Alpha Vantage (TREASURY_YIELD).
• Correlation between QQQ's monthly total return and the monthly change in the average yield, in percentage points.

Sources

• Board of Governors of the Federal Reserve System. Selected Interest Rates (H.15): Market yield on U.S. Treasury securities at 10-year constant maturity, monthly averages, January 2000 – September 2026. Retrieved via Alpha Vantage TREASURY_YIELD, October 2026.
• Alpha Vantage. TIME_SERIES_MONTHLY and DIVIDENDS (QQQ). Data retrieved October 2026.

FAQ

Do rising interest rates hurt tech stocks? Since 2020, rising yields have tended to line up with weaker Nasdaq-100 months. From 2000 to 2019, it was the opposite.

What's the correlation between the 10-year yield and the Nasdaq? Over 2000–2026 it was close to zero (+0.09) in monthly data: positive before 2020 and negative after.

Why did the Nasdaq fall in 2022? A big factor was the jump in yields as inflation rose: the average 10-year yield went from 1.47% to 3.62% over the year, and QQQ lost 32.6%.

Are falling yields good for the Nasdaq? Not always. Months with the sharpest yield drops averaged −3.06% for QQQ, because they were mostly months of market stress.

What is the 10-year Treasury yield? The rate the U.S. government pays to borrow for ten years. Investors use it as a benchmark to discount future earnings, which is why stock valuations react to it.

Should I watch the 2-year or the 10-year yield? Both. The 2-year reacts most to expected Fed policy, while the 10-year carries more of the inflation and growth outlook. A move led by the 2-year usually means the market is repricing the Fed.

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Research and education only. Not financial advice. Past results do not predict future returns.

How this article was made: drafted with AI assistance from public data and the sources listed above; facts and figures checked by Gabriel Décarie and Karel Panneton.