What happened
Shares of Lemonade (LMND -0.06%), an online-based insurance company, were tumbling today as Treasury yields rose, putting pressure on growth stocks.
The tech stock was down by 5.2% as of 3:10 p.m. ET.
So what
Lemonade is a unique company that uses artificial intelligence to find insurance policies for potential customers. This puts Lemonade in the fast-growing technology sector and, because of its insurance policies, ties it to the broader financial sector as well. Unfortunately, both sectors were doing poorly today and Lemonade got squeezed as a result.
Image source: Getty Images.
Technology stocks were falling today as Treasury bond yields climbed higher. The 2-year yield rose above 1% for the first time in nearly two years. And the 10-year note hit 1.86%, the highest it's been since January 2020.
High-growth tech stocks often suffer when yield rates rise because it means that the future profits of these companies will be worth less than they would have been if yields had remained lower.
Additionally, Goldman Sachs reported worse-than-expected quarterly results today, which put pressure on stocks in the broader financial sector. Goldman Sachs missed analysts' earnings estimate for the fourth quarter, and investors took the miss as a barometer for the rest of the market. As a result, the S&P 500 was down 1.5% as of this writing.
Now what
Long-term Lemonade investors would do well not to get caught up in today's sell-off. Nothing fundamentally changed about Lemonade's business today, nor did the company make any big announcement.
The market is responding to Goldman Sachs' earnings miss and rising bond yields, but that shouldn't change anyone's initial investment thesis for Lemonade.
