US equities fell on Monday, indicating losses for key indices as rising bond yields raised concerns that technology stocks may look too expensive.
Futures linked to the S&P 500 fell 0.7%, indicating that the broad market meter will continue to fall after the opening clock in New York. The benchmark fell by 0.7% last week. Contracts linked to the technology-heavy Nasdaq-100 fell 1.3%, and Dow Jones Industrial Average futures slipped 0.6% lower.
Investors are betting that the deployment of vaccines and President Biden’s proposed $ 1.9 billion stimulus package will accelerate the economic recovery later this year.
These expectations, coupled with concerns about rising inflation and the prospect of rising interest rates sooner than expected, have contributed to US government bond sales over the past few weeks. Falling bond prices have led to rising yields, raising concerns that high-flying stocks are starting to look less attractive than assets that are considered risk-free.
“As yields increase, there is more demand for [government bonds] in relation to other assets, ”said Hani Redha, a portfolio manager at PineBridge Investments. ‘How much are you willing to pay for shares? If you only get a very low return on bonds, you should be prepared to pay a higher amount for shares. But that is starting to change as bond yields rise. ”