US stock futures fell on Monday, indicating losses for the major indices as rising bond yields sparked concerns that technology stocks look too expensive.
Futures pegged to the S&P 500 fell 0.7%, indicating that the broad market meter will continue to decline after the opening bubble in New York. The benchmark fell 0.7% last week. Contracts related to the technology-heavy Nasdaq-100 were down 1.3% and the Dow Jones Industrial Average futures down 0.6%.
Investors are betting that the introduction of vaccines and President Biden’s proposed $ 1.9 trillion stimulus package will accelerate the economic recovery later this year.
Those expectations, combined with worries about rising inflation and the prospect of interest rates rising faster than expected, have contributed to a sell-off in US Treasuries in recent weeks. Falling bond prices have resulted in soaring yields, which has sparked concerns that high-flying stocks look less attractive than assets considered risk-free.
“As the yield increases, there is more demand for it [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 are only getting a very low return on bonds, you should be willing to pay a higher amount for stocks. But that starts to change when bond yields rise. ”