Stocks were slightly higher in early trading Monday as a modest drop in bond yields was helping lift the broader market. Technology stocks were among the better performers, while banks fell.
The S&P 500 index was up 0.5%. The Dow Jones Industrial Average was up 0.1% and the technology-heavy Nasdaq rose 0.9%.
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.
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.
The yield on the 10-year Treasury note fell to 1.69% after trading as high as 1.74% last week. Amazon, Apple, Cisco and Microsoft all rose 1% or more.
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 was down 2%.
The U.S.-traded shares of British drug company AstraZeneca were up 2% 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 was up 14% after a Canadian railroad announced it would buy the company for $25 billion.
In international markets, the Turkish lira nosedived 17% after the country’s president, Recep Tayyip Erdogan, removed central bank head Naci Agbal from his post on Saturday. The currency was trading at about 7.8 lira to the dollar Monday morning.
Agbal had been struggling to counter inflation by raising interest rates, while Erdogan contended that raising interest rates would contribute to inflation, contrary to economic experience and theory.
