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Tech Stocks Poised to Decline as Bond Yields Rise – The Wall Street Journal

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U.S. stock futures dropped Monday and a selloff in U.S. government bonds extended into its sixth week after progress toward a new fiscal stimulus bill brightened economic prospects and sapped demand for technology stocks.

Futures linked to the S&P 500 slipped 0.7%, suggesting that the broad market may decline after the opening bell. The benchmark ended Friday up 0.8% for the week, following a volatile week in which investors rotated out of big technology stocks. Nasdaq-100 futures fell 1.6% at the start of the new week, pointing to tech stocks extending losses.

In the bond market, the yield on benchmark 10-year US. Treasurys ticked up to 1.603% as investors moved funds out of assets considered to be the safest in the world. Yields rise when bond prices fall. It had ended Friday at 1.551%, its highest since February 2020.

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President Biden’s $1.9 trillion Covid-19 relief plan was approved in the Senate over the weekend, and faces a vote in the House as early as Tuesday. The additional fiscal spending is expected to bolster the pace of economic recovery and boost inflation. As the outlook brightens, money managers are moving out of government bonds and technology stocks, and into sectors such as banks and energy that are likely to rebound with the economy.

“Stimulus checks into people’s bank accounts will be a big propeller of growth, given the consumer in the U.S. makes up such a big part of U.S. growth,” said Shaniel Ramjee, a multiasset fund manager at Pictet Asset Management. “The underlying strength of the U.S. economy, growing expectations that the stimulus gets fully passed, plus inflation expectations rising because of oil: these are all likely to continue to push bond yields higher.”

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