Stocks finished higher Monday and the Nasdaq posted solid gains as Treasury yields pulled back.
The Dow Jones Industrial Average finished up 103 points, or 0.32%, to 32,731, the S&P 500 rose 0.7% and the tech-heavy Nasdaq gained 1.23%.
Leading the Dow industrials higher were four tech majors: Intel INTC, up 2.9% at $65.63, Apple (AAPL) - Get Report, up 2.8% at $123.39, Cisco (CSCO) - Get Report, up 2.7% at $50.30, and Microsoft (MSFT) - Get Report, up 2.5% at $235.99.
The 10-year U.S. Treasury yield was at 1.682% Monday, coming off last week's moves to the highest in about 14 months.
Bond yields recently have been rising on investor concern that a stronger economic rebound will lead to higher inflation. Those worries, in turn, have sparked a rotation to value stocks and away from high-growth equities, particularly rate-sensitive technology shares.
Federal Reserve Bank of Richmond President Thomas Barkin told Bloomberg that as the pandemic recedes and the economy recovers, prices will be pushed up. But he added there was no sign yet that this will deliver unwanted inflation.
“We are going to see an extremely strong year and I think that strong year is going to lead to price pressures.,” Barkin said Sunday in an interview on Bloomberg Television. “I want to emphasize inflation is not a one-year phenomenon, it’s a multiyear phenomenon.”
The Fed has said it believes an increase in inflation in 2021 will be temporary given COVID-19's disruption to the labor market.
"The recent rise in rates should continue to compress multiples on high flyers and stocks with rich valuations," said Zach Abraham, principal and chief investment officer of Bulwark Capital Management. "A rise in inflation should also result in a much more friendly environment for value stocks and dividend payers.
"We’ve had a historic run in growth. But the time for value has come. This rotation has a lot of kegs and should run for a while," Abraham added.
Wall Street finished to the downside last week, with the S&P 500 posting its first weekly decline in three weeks. The broad market index set an all-time high last Wednesday.
The Turkish lira tumbled as much as 15% on Monday after President Recep Tayyip Erdogan abruptly replaced the country's central bank chief just days after he approved a sharp interest rate hike designed to blunt the impact of inflation in the struggling economy.
AstraZeneca's (AZN) - Get Report COVID-19 vaccine was shown to be 79% effective with no serious side effects in U.S. clinical trials of more than 32,000 people. The shot also was 100% effective at preventing severe disease and death.
The U.K. drugmaker said it would continue to analyze the data and prepare to seek emergency use authorization from the Food and Drug Administration in the coming weeks. The company's shares moved up 4% to $51.20.
Kansas City Southern (KSU) - Get Report agreed to a $25 billion takeover by Canadian Pacific Railway (CP) - Get Report in a stock-and-cash deal that creates the first comprehensive rail network connecting Mexico, Canada and the U.S. The stock leaped 11% to $249.09.