Technology shares booked steep losses on Monday as inflation concerns weighed on the once high-flying growth names.
Investors concerns are growing to the rapid rising in Treasury yields in recent weeks as they could especially hurt high-growth companies reliant on easy borrowing while diminishing the relative appeal of stocks.
Many on Wall Street still believe that the jump in bond yields reflects a sign of growing confidence in the economic recovery, and stocks should be able to absorb higher rates amid strong earnings.
Since the start of February, 10-year yields are up about 27 basis points, on pace for their largest monthly gain in three years, with Monday’s close, up at 1.37%.
The 30-year yield touched a one-year high of 2.2% Monday. A basis point is 0.01%.
Looking forward, all eyes will be on U.S. Federal Reserve Chairman Jerome Powell, who delivers his semi-annual testimony on the economy before the Senate Banking Committee on Tuesday.
At the finishing bell, on the New York Stock Exchange (NYSE), the Dow Jones Industrial Average finished the day higher after eking out +27.37 points, or +0.09%, to 31,521.69.
The broad-based Standard & Poor’s 500 Index closed lower for the fifth straight session, after slipping -30.21 points, or -0.77%, at 3,876.50, amid the weakness in tech and consumer discretionary.
The rich-tech Nasdaq Composite index fell -341.42 points, or -2.46% to 13,533.05.
Shares of Apple Inc, Microsoft Corp, Alphabet Inc, and Amazon.com Inc resumed their slide from the previous week, falling between -0.9% and -5%, while Tesla fell -8.5% on the day.
U.S. airline stocks rebounded after Deutsche Bank upgraded several names in the industry to a buy rating. American Airlines jumped more than +9% on Monday.
Discovery Inc jumped +9.5% after the media company said it was expecting 12 million global paid streaming subscribers by the end of February, as coronavirus-led restrictions kept people at home.
Monday’s losses pared the Nasdaq’s February gains to +3.5%, with the S&P 500 rising +4.4% this month, while the Dow has gained +5.1%.