What happened
Shares of Silicon Laboratories (SLAB +0.10%) were tumbling this week on no company-specific news. Instead, investors might have been reacting to rising Treasury yields that have caused a sell-off of some tech stocks.
As of Friday morning, Silicon Labs was down 11.6% over the past week, according to data from S&P Global Market Intelligence.
So what
Earlier this week, the two-year Treasury yield topped 1% for the first time in about two years and the 10-year note hit 1.86% on Tuesday, the highest it's been since January 2020.
Image source: Getty Images.
Both of those bond rates have dropped a bit from earlier this week, but the damage had already been done to tech stocks. Investors often sell such stocks when bond yields rise because it means that the future profits of high-growth companies will be worth less than they would have been if yield rates remained lower.
Back in October, Silicon Labs' share price skyrocketed after it reported its third-quarter results. Revenue in the quarter surpassed the company's top end of guidance, growing 39% year over year to $185 million.
That bullishness for Silicon Lab's stock remained for several months, but this week's drop ate into the gains made over that time.
Now what
Silicon Labs will release its fourth-quarter and full-year 2021 results on Feb. 2, so investors might want to see what figures the company releases before making any decisions about the stock.
Additionally, long-term investors might want to avoid panic-selling when bond yields rise. Nothing has fundamentally changed with Silicon Labs' business over the past week, so selling the stock based on rising rates might not be a wise move based on your original investment thesis.
