Technology companies lead stocks higher on Wall Street

Gains in big technology companies led stocks broadly higher on Wall Street on Monday as traders welcomed some easing in long-term bond yields.

The S&P 500 index rose 0.7% while the tech-heavy Nasdaq climbed 1.2%. Amazon, Apple, and Microsoft made solid gains.

The yield on the 10-year Treasury note fell to 1.69% after trading as high as 1.74% last week. A steady rise in bond yields over the past month has been luring investors away from high-flying tech stocks.

Stocks ended last week in the red as a rise in bond yields caused selling in many parts of the market. Bond yields have been moving steadily higher all year as investors have bet that the U.S. economy is poised to strongly recover later this year as vaccinations and trillions of dollars of government stimulus take effect.

But a rise in bond yields causes parts of the stock market to appear more expensive than others, the dominant example being technology stocks. Big technology stocks rose sharply last year, and their high valuations make them a prime target for selling when investors can find safer places to park their money.

The prospect of higher interest rates as bond yields rise has some investors concerned that economic growth could slow. There are also concerns that the rise in bond yields could be a harbinger of inflation.

“There will be a pickup in inflation, no doubt about that, as the recovery progresses,” said David Lefkowitz, head of Americas equities at UBS Global Wealth Management. “As long as rates are rising for the right reasons, that’s fine for stocks.”