Biotech follows growth stocks down Tuesday on interest rate concerns, cyclical rotation

The sharp fall of biotech stocks early Tuesday was likely due to investor concern about long-term increases in interest rates and the nearer term prospect of a rotation into more cyclical sectors that would benefit from a post-COVID economic recovery. Biotech stocks recovered much of their losses by end of day, suggesting the concerns had moderated.

The NASDAQ Biotechnology Index (NBI) slumped 4% in early trading Tuesday on speculation that long-term interest rates may start to rise. An increase in interest rates would mean investors apply higher discount rates to growth investments like biotech, translating into lower valuations for current assets...