As stock market unravels Monday, here’s the level the Nasdaq Composite needs to defend to avoid a correction

The Nasdaq Composite last week posted its biggest one-week percentage decline since February, as rising bond yields punctured tech valuations.

On Monday, the 10-year Treasury note TMUBMUSD10Y, 1.789% yielded around 1.8%, adding to highs not seen since January of 2020, according to Dow Jones Market Data. Yields move opposite to price.

Yields have been rising as investors anticipate tighter policy from the Federal Reserve and as many as three interest-rate increases in 2022 starting possibly in March. Goldman Sachs analysts, in a recent research note, estimate that there could be as many as four interest rate hikes this year.

Read: Why New Year’s chaos may signal a more balanced — but volatile — stock market in 2022 as investors grapple with a hawkish Fed

Tech and other growth stocks are more sensitive to moves in yields. That’s because valuations of growth stocks are based on cash flows that extend far into the future. A rise in yields makes that future cash less valuable than it was when the yield on “risk-free” Treasurys was lower.

The Nasdaq Composite last entered correction on March 8 and didn’t exit correction until April 9.

The Dow Jones Industrial Average DJIA, -1.22%, meanwhile, was down 500 points, or 1.4%, while the S&P 500 index SPX, -1.46% was off 1.8% in Monday’s trade.