U.S. Stocks Drop Amid Rising Bond Yields

U.S. stocks fell on Monday as rising bond yields fueled concern that a surge higher in technology shares could slow down.

The tech-heavy Nasdaq Composite dropped 0.9% in morning trading. The broad-based S&P 500 declined 0.4%, while the Dow Jones Industrial Average slipped 50 points, or 0.2%

Many of the tech giants that had been trading at record highs earlier this month posted declines. Microsoft dropped 2.3%, while Google parent Alphabet fell 1.5%. Apple was down 1.4%.

Investors’ bets on an economic rebound later in the year have contributed to a selloff in U.S. government bonds in recent weeks. Declining bond prices result in rising yields, which make it more attractive for investors to buy assets considered to be safe havens, while reducing the allure of highflying tech stocks.

“As the yield goes up, 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 stocks? If you’re only getting a very low yield from bonds, you should be willing to pay a higher amount for stocks. But that starts to change when bond yields go up.”