Technology companies lead stocks higher on Wall Street

In this Nov. 23, 2020 file photo, the New York Stock Exchange is seen in New York. Stocks are off to a mixed start on Wall Street as gains for several big technology companies offset losses in banks and other parts of the market. The S&P 500 index is coming off its first weekly loss in three weeks. (AP Photo/Seth Wenig, File)

Technology companies led stocks higher on Wall Street Monday, reversing some of the market's losses from last week, as investors welcomed some easing in long-term bond yields.

The S&P 500 index rose 0.7%, as gains in technology, communication and other stocks outweighed a pullback in financial companies. The rally in tech stocks pushed the Nasdaq composite 1.2% higher.

A steady rise in bond yields over the past month has been luring investors away from high-flying tech stocks, but traders have also been quick to snap up tech stocks on days when bond yields decline or only rise slightly.

The yield on the 10-year Treasury note fell to 1.69% after trading as high as 1.74% last week. Amazon, Apple, and Microsoft all made solid gains.

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.”

The S&P 500 added 27.49 points to 3,940.59. The Dow Jones Industrial Average rose 103.23 points, or 0.3%, to 32,731.20. The Nasdaq climbed 162.31 points to 13,377.54. The Russell 2000 index of smaller companies slid 20.70 points, or 0.9%, to 2,266.84.

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.

Traders seized on the pullback in bond yields to snap up shares in some of the Big Tech companies Monday. Amazon rose 1.2% and Apple gained 2.8%, while Microsoft rose 2.4%.

Bank stocks fell. Lower yields potentially mean banks will only be able to charger lower interest rates to borrowers. The KBW Bank Index of the 24 largest banks fell more than 2%.

Shares in several travel-related companies, including airlines, cruise operators and booking sites, fell. Carnival slid 5.1%, while American Airlines dropped 4.6%. Expedia Group lost 3.8%.

The U.S.-traded shares of British drug company AstraZeneca rose 4%% after British and U.S. health officials said the company's COVID-19 vaccine was safe and earlier reports of blood clots were outweighed by the health benefits of the vaccine.

Kansas City Southern jumped 11.1% for the biggest gain in the S&P 500 after a Canadian railroad announced it would buy the company for $25 billion.

Apollo Global Management rose 4.5% after the private equity company announced that its longtime chairman Leon Black would be retiring. Black's reputation had been damaged in the last couple of years by his association with disgraced financier Jeffrey Epstein.

The Turkish lira nosedived 7.8% after the country’s president, Recep Tayyip Erdogan, fired his third central bank head in less than two years over the weekend. The latest abrupt change raised concerns about a possible return to the unconventional monetary policy favored by the Turkish president.