(Bloomberg) — A rebound in the Nasdaq 100 that recouped as much as half of its $1.5 trillion losses from its February high hasn’t been enough to deter skeptics. In fact, analysts are warning that the index may yet face more battering.Their concern emanates from the bond market, where rising yields have put pressure on richly valued stocks such as the tech companies that populate the Nasdaq gauge. An increase of 50 basis point in 10-year Treasury yields could lead to a bear market for the index, or a decline of as much as 20%, according to a study from Ned Davis Research.And as the economy heals, investors are embracing sectors such as energy that will likely benefit. One way of seeing the impact of that rotation out of tech is to plot the Nasdaq’s relative altitude versus the S&P 500, a gap that after briefly exceeding its level from 2000 has recently narrowed. To DoubleLine Capital LP founder Jeffrey Gundlach, it’s a sign that another collapse may be in store.While single-day rallies — 4% on Tuesday and 2.4% on Thursday — lifted the Nasdaq 100 to its first gain in four weeks, they’re not calming nerves. After all, big up days are not uncommon during a downtrend. In 2000, when the market started a three-year crash, the index had 27 sessions where it rose at least 4%. That compared with six such days in 1999, when prices doubled.“The early stages of a bear market is typically punctuated by ferocious rallies, and what matters in the end is how far the rallies extend and not how quickly they move within a single session,” said Michael Shaoul, chief executive officer at Marketfield Asset Management LLC. “Evidence continues to mount that the technology sector has finally relinquished its position as key global leadership.”The Nasdaq 100 is poised to trail the S&P 500 for a second month in a row. In a week when the tech-heavy gauge fell into a 10% correction, other indexes tracking everything from small-caps to banks, transports to industrials, climbed to records. On Wednesday, a version of the S&P 500 that strips out market cap bias — treating Apple Inc. the same as News Corp. — hit an all-time high even as the Nasdaq 100 was roughly 8% below its February record, a divergence not seen in two decades.That’s raising alarms for anyone who lived through the dot-com crash. Back then, when the Nasdaq 100 started falling in March 2000, the equal-weighted S&P 500 kept marching forward and didn’t peak until 14 months later — a sign that money was being shifted away from the tech behemoths that soared in the internet bubble. Ultimately, the Nasdaq 100 lost half of its value.“People should not take solace in the fact that almost everything else besides the tech group is acting well,” said Matt Maley, chief market strategist at Miller Tabak + Co. “If the tech group continues to underperform, it’s going to weigh on the rest of the stock market eventually.”To be sure, as expensive as they may look now, software and internet stocks don’t match the extremes seen 20 years ago. And thanks to innovations like cloud computing and automation, their earnings are expanding, as opposed to contracting or nonexistent, as they were in 2000. But the strengthening economy, buttressed by vaccines and government support, alongside rising bond yields could mean trouble for the market’s biggest sector.While some strategists have brushed aside the yield risk, saying tech stocks have shown a fickle relationship with Treasuries over time, Joe Kalish, chief global macro strategist at Ned Davis Research, found that since 2014, the Nasdaq 100’s forward earnings yield — the inverse of its price-earnings ratio where the higher it is, the cheaper stocks are — has moved almost in lockstep with forecast corporate bond rates.In his model, if 10-year Treasury yields rise to 2% this year, that in turn could drive long-term Baa-rated bond rates to 4.5%, a scenario where the Nasdaq 100 would have to drop as much as 20% to stay attractive, all else equal. If yields climbed but the Nasdaq didn’t move, this would indicate over-valuation, Kalish said, adding his model correctly flashed warnings in 1987 and 2000.Based on the price-earnings ratio, the Nasdaq 100 isn’t cheap relative to other stocks, even after the latest pullback. With a multiple of 28, its premium over the S&P 500 stood roughly 7% above its five-year average.Moreover, the growth advantage that has sustained tech’s outperformance in all but one year since 2009 is poised to disappear — at least for the next two years — as pandemic-beaten firms like airlines and automakers roar back. Profits from software and internet companies are expected to expand 22% this year and 12% in 2022. Both lag behind the broad S&P 500, where earnings are forecast to increase 24% and 15%, respectively, data compiled by Bloomberg Intelligence show.Of course, with the latest federal relief package approved, cash may again flood into equities, preventing losses from snowballing. Yet with Nasdaq 100 knocking on the door of its relative peak, it’d be a mistake not to consider the downside risk, according to Jim Paulsen, chief investment strategist at Leuthold Group.“New-era investments are at a significant crossroads,” he said. “After a prolonged period of extensive outperformance by the Nasdaq and tech stocks, it is not unreasonable to foresee a phase of underperformance, consolidation or even an outright collapse.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.