Shares of the Technology Select Sector SPDR ETF (XLK) dropped 1.5% to $134.65 on March 26 as Iran's rejection of a U.S.-brokered ceasefire sent oil prices surging and investors scrambling out of growth stocks. The selloff erased a week of gains and raised a familiar question: how much geopolitical risk can a sector built on future earnings absorb before the damage sticks? Oil Above $105 and Iran Talks Collapsing — Can Tech's Flagship ETF Weather a Geopolitical Storm It Can't Control?

Shares of the Technology Select Sector SPDR ETF slid 1.5% to $134.65 on March 26 as Iran's rejection of a U.S. ceasefire proposal reignited the worst fears of a prolonged Middle East conflict. By 9 a.m., Brent crude had reached $105.85 per barrel, up $6.10 from the prior morning and roughly $32 above its year-ago price. The move punished the most rate-sensitive corner of the market and left XLK holders staring at a fund now down roughly 4% year-to-date.

• $106 Oil Hits Tech Where It Hurts Most — Energy Bills and Interest Rates

Higher energy costs directly threaten tech stocks by raising expenses for data centers and stoking broader inflation that could delay anticipated Fed rate cuts.

The Fed's projection of just one rate cut in 2026 amplifies the risk, because tech companies depend on cheap borrowing to fund growth investments. With XLK's nearly 99% allocation to information technology, every tick higher in oil tightens the vise on the valuations investors are willing to pay.

• Investors Are Fleeing Growth Stocks for Safer Ground

The Nasdaq fell 0.84% on March 24 — steeper than any other major index — dragged by tech and communications declines, while energy, materials, and utilities led the S&P's sectors.

Short interest in XLK has nearly tripled since November, jumping from roughly 6.5 million shares to over 18 million by late January , signaling growing bearish bets well before this week's escalation. Net fund flows over the past five days show $663 million leaving XLK.

• Three Stocks Control XLK's Fate — and All Three Face Pressure

XLK holds $87.7 billion in assets, and its top three holdings — Nvidia, Apple, and Microsoft — together represent roughly 38% of the fund.

Microsoft shares have declined nearly 20% year-to-date as high energy costs from its global data center expansion weigh on cloud margins.

Apple faces valuation pressure from high interest rates and consumers' growing sensitivity to borrowing costs for premium hardware.

• The Bigger Question: How Long Can This Last?

The crisis traces back to February 28, when U.S.-Iran tensions escalated into direct confrontation; Iran's subsequent closure of the Strait of Hormuz — the transit point for roughly 20% of the world's oil — has plunged energy markets into chaos.

The EIA forecasts Brent staying above $95/barrel for the next two months before falling below $80 in Q3 — but that assumes the conflict doesn't worsen. If oil stays elevated, XLK's Q1 earnings season starting in late April becomes the next proving ground for whether Big Tech can absorb the hit or pass it along to shareholders.