Earlier this year, U.S. investors were fascinated by stocks from a group dubbed the "Magnificent Seven", comprising of seven companies: Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla, and Meta Platforms. The market value of the group reached $11.5 trillion at one point in July.

Currently, however, the "Magnificent Seven" seem to have lost their driving force, as more than $1 trillion has been wiped off from this group.

At the same time, the S&P 500 Information Technology index, which focuses on large-cap technology stocks, has fallen by more than 400 points from its July high.

Lately, 10-year U.S. Treasury yields rose above 4.5 percent, driven by a more hawkish U.S. Federal Reserve (Fed) for the first time since 2007. This trend has created strong market reactions, as a more hawkish Fed adds to concerns about bonds facing a toxic mix of large U.S. fiscal deficits and persistent inflation, according to Bloomberg.

The surge in U.S. Treasury yields has various impacts on the stock market, including reducing the attractiveness of stocks compared to bonds and increasing corporate borrowing costs. This is particularly detrimental to tech stocks, as the value of tech companies’ future profits is less attractive relative to the risk-free return of holding government bonds.

“The worry about rising yields hasn't dissipated - it's become more severe, and even though tech stocks have been able to hang on, you're starting to see the cracks,” Quincy Krosby, chief global strategist at LPL Financial told Bloomberg on Wednesday.

Earlier this week, Minneapolis Fed President Neel Kashkari said he supports one more rate hike this year if the economy is stronger than expected, Bloomberg reported.

"Now that it has finally sunk in that rates are indeed going to stay higher for longer, (investors are) quickly becoming worried about the valuation levels of these big-cap tech stocks, " Miller Tabak + Co. Chief Market Strategist Matt Maley said by email, according to Bloomberg.