Investors should hold onto their high-growth tech stocks even as interest rate volatility batters the sector, Goldman Sachs says

• Investors should hold on to their high-growth tech stocks despite this week's interest rate-induced sell-off, Goldman Sachs said.
• The bank said the velocity of rate spikes has a bigger impact on high-growth stocks than the absolute level of interest rates.
• "Our overall macro outlook of low rates and low trend economic growth supports maintaining longer-term positions in high quality secular growth stocks," Goldman said.
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A spike in interest rates sparked a deep sell-off in technology stocks on Tuesday, but Goldman Sachs says investors should still hold onto their high-growth stocks for the long-term, according to a Tuesday note.

The 10-Year US Treasury yield hit a 3-month high of 1.56% on Tuesday, sparked by fears of rising inflation and uncertainty towards Congress' ability to raise the debt ceiling before the Treasury runs out of money in mid-October.

But interest rates are still historically low, and a low economic growth environment in the long-term should support valuations for high-quality, high-growth stocks that are benefiting from secular trends, according to Goldman.

"Our overall macro outlook of low rates and low trend economic growth supports maintaining longer-term positions in high quality secular growth stocks," analysts said.

For now, cyclical stocks may outperform longer-duration technology stocks in the short-term if interest rates continue to rise. But that outperformance will be "more muted" in today's environment than it was earlier this year due to expectations of slower economic growth, according to Goldman.

In fact, September's surge in interest rates is less extreme than the interest rate spike seen earlier this year, when a spike in the 10-year yield was in part driven by expectations of a quick vaccination roll-out and a strong rebound. That view has since shifted lower.

"Today, economic growth is decelerating, the FOMC is expected to announce the start of tapering at its November meeting, and our economists have downgraded China's economic growth forecasts," Goldman said.