Here's why the world's largest asset manager is still bullish on technology stocks despite recent jump in interest rates

• High-growth technology stocks have been under pressure as interest rates continue to rise.
• But BlackRock isn't fazed by the recent weakness and has a bullish outlook for the tech sector.
• "Central banks will be slower to curb inflation than in the past, supporting our pro-risk stance and preference for tech," BlackRock said.
• Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

A surge in interest rates isn't scaring the world's largest asset manager away from the high-growth technology sector.

According to BlackRock, which has nearly $9 trillion in assets under management, investors should remain constructive on technology in both the short and long term, a Tuesday note said. The asset manager views the narrative of rising interest rates hurting technology stocks as "too simplistic."

Technology stocks have been underperforming the broader market for months as interest rates move higher amid a reopening of the economy. On Tuesday, the 10-year US Treasury yield spiked to a 14-month high of 1.77%, sparking another sell-off in the tech sector.

"Tech is a diverse sector and the driver of higher yields matters more than the rise itself," BlackRock said, adding that "central banks will be slower to raise rates to curb inflation than in the past, supporting our pro-risk stance and preference for tech."

A sharp rise in interest rates due to the Fed's expected policy path would no doubt ding equity valuations, "but instead, the recent yield spike has been driven by an increase in the term premium," the note said. Fed Chairman Jerome Powell has consistently committed to keeping the short-term Fed Funds Rate lower for longer.

That makes stocks "even more appealing than bonds in a multi-asset context, and suggests any further sell-offs in tech may present opportunities," BlackRock said.

Long-term trends of digitalization and a green transition to a low-carbon economy should support the tech sector's ability to bear earnings expectations, which "once again will be rewarded if bond yields settle back into a range," according to BlackRock.

But BlackRock highlights that significant risks to the tech sector remain, including increased regulation across the globe, the potential for higher corporate taxes in the US, and continued tensions between the US and China.

"The bottom line: we maintain a positive tactical and strategic view on the tech sector," BlackRock concluded.