Another Rally for Big Tech Stocks Like Apple Leads Nasdaq to Clinch Day Two of Gains
Cheers to gains!

The tech sector made more strides higher on Monday, July 10, leading the Nasdaq to its second day of solid gains and lightening the mood on the rest of Wall Street.

The S&P 500 added 0.09% and the Nasdaq rose 0.38%. The Dow Jones Industrial Average dropped slightly, by 0.02%.

Tech stocks moved higher on Monday after driving markets to major gains on Friday, July 7. Sector gains boosted the Nasdaq by just more than 1% to close out Friday's session. The sector has been in rebound mode after a rough June -- the sector had pulled back that month from lofty heights achieved during the first several months of the year.

The FAANG stocks (Facebook Inc. (FB) , Inc. (AMZN) , Apple Inc. (AAPL) , Netflix Inc. (NFLX) and Alphabet Inc. (GOOGL) , were each higher Monday. The stocks have taken a beating in recent weeks, beginning with their initial slide on June 9. The Technology Select Sector SPDR (XLK) increased 0.69%. 

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"We made the case several weeks ago that tech was due for a rest, but not a major top. Over the last month, technology is down [roughly] 4%, yet the S&P is essentially flat, suggesting there is underlying strength," said Jonathan Krinsky, chief market technician at MKM Partners, in a note. "There has been no damage done and if anything, it has now re-set expectations heading into earnings season."

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Federal Reserve Chair Janet Yellen heads to Capitol Hill in the coming week and Wall Street will be paying close attention to her assessments of the U.S. economy and how it might be affected by monetary-policy tightening. Yellen is set to deliver her semiannual testimony on monetary policy to the House Financial Services Committee on Wednesday, July 12, at 10 a.m. ET, and then to the Senate Banking Committee on Thursday, July 13, at 10 a.m. ET.

In its semiannual monetary policy report delivered before Yellen's testimony, the Federal Reserve said it expects "gradual" increases in the federal funds rate and said it's likely to start trimming reinvestment of proceeds from in its fixed-income portfolio later this year. The report was released on Friday. 

Yellen "could face some grilling as to why she is raising rates when the economy is still quite slow and inflation is nowhere to be seen," Euler Hermes North America chief economist, Dan North, told TheStreet. "The answer is, 'It's not inflation today -- it's inflation tomorrow.' It takes three to five quarters for changes in monetary policy to fully affect the economy, and with unemployment less than 4.5%, inflationary pressures are surely on the Fed's mind."

Hawkish talk from the Fed has increased recently, with several members expressing confidence that the U.S. could withstand the slow withdrawal of some stimulus measures set up in the wake of the 2008 financial crisis. In minutes from a June policy meeting, members discussed starting to unwind the $4.5 trillion in bonds on its balance sheet and the possibility of another rate hike before the year is out.

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