Rising Treasury yields sink tech stocks, boost banks
Rising Treasury bond yields drove bank stocks higher Friday while sending technology shares tumbling and pushing the S&P 500 off of a record high.
An increase in the 10-year Treasury bond yield to 1.6 percent, a sign of Wall Street expecting higher interest rates, interrupted a broad stock market rally in the first day of trading after President Biden signed a $1.9 trillion COVID-19 relief bill.
The Dow Jones Industrial Average rose roughly 140 points, climbing 0.4 percent by noon Friday as bank stocks rallied. Shares of Goldman Sachs, JPMorgan Chase, Bank of America, Citigroup and Wells Fargo all rose more than 1 percent, with investors seeing high profits through interest on the horizon.
The Nasdaq had fallen roughly 1.1 percent Friday as shares of major technology companies, which are traditionally more vulnerable to increases in interest rates, fell broadly. The S&P was down 0.3 percent after reaching a new record with the Dow on Thursday.
“The recovery is … broadening out. Some stocks that were left out of last year’s jumps are beginning to lead the market higher,” wrote Lindsey Bell, chief investment strategist at Ally Invest.
“Many of the Dow’s top performers this year have been financial and industrial stocks — two ‘reopening sectors’ that could continue to benefit from the pandemic’s end.”
Stocks in industries expected to bounce back or profit significantly from the end of the pandemic have cruised higher over the past week while tech stocks, which drove most of 2020’s massive rebound, have fallen sharply.
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