U.S. markets and stock exchange traded funds retreated Wednesday, with once high-flying technology shares taking the brunt of the beating, as investors shifted to more economically sensitive sectors that could benefit from a broad recovery.

On Wednesday, the Invesco QQQ Trust (NASDAQ: QQQ) fell 2.6%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was down 0.2%, and iShares Core S&P 500 ETF (NYSEArca: IVV) dropped 1.1%.

“Today is the perfect encapsulation of the big theme we’ve been seeing in the past couple of months: The vaccine rollout is going well and the economy improving, and that is sending yields and rate expectations higher, which is hurting growth stocks,” Baird investment strategist Ross Mayfield told Reuters.

According to the Federal Reserve, the U.S. economic recovery continued at a modest pace for the first weeks of 2021 and businesses were optimistic about the months ahead. Demand for housing remained ‘robust’.

However, policymakers warned of the slower improvements in the job market. Data revealed U.S. private employers hired fewer workers than expected in February, reflecting the ongoing struggle in the labor market that has yet to return to pre-Covid-19 levels.

The spike in yields on benchmark 10-Year Treasury notes also added some market pressure. Rising interest rates disproportionately hurt high-growth tech companies since investors value them based on earnings expected years into the future. Rising rates diminish the value of future earnings more than those in the short-term.

“There is a definite headwind for equity markets if yields go above the 1.5% level with most investors keeping an eye on the pace of yield growth,” Michael Stritch, chief investment officer at BMO Wealth Management, told Reuters.

Adding to the rising rate concerns, the U.S. Senate is expected to push forward President Joe Biden’s $1.9 trillion coronavirus relief package on Wednesday, with Democrats expected to sign it into law before March 14 to head off expiration on some benefits.

For more news, information, and strategy, visit the Equity ETF Channel.