US stock futures fell on Monday, pointing to losses for the major indices as rising bond yields raised concerns that tech stocks look too expensive.
Futures pegged to the S&P 500 fell 0.7%, indicating that the overall market indicator will continue to decline after the New York opening bell. The benchmark index fell 0.7% last week. High-tech Nasdaq-100-linked contracts fell 1.3% and Dow Jones Industrial Average futures fell 0.6%.
Investors are betting that the launch of vaccines and President Biden’s proposed $ 1.9 trillion stimulus package will accelerate the economic rebound later this year.
Those expectations, combined with concerns about rising inflation and the prospect of interest rates rising earlier than expected, have contributed to a sell-off of US government bonds. Falling bond prices results in increased returns, which has stoked concerns that high-yield stocks are beginning to look less attractive than assets considered risk-free.
“As performance increases, the demand for [government bonds] relative to other assets, “said Hani Redha, portfolio manager at PineBridge Investments. “How much are you willing to pay for the shares? If you only get a very low return on the bonds, you should be willing to pay a higher amount for the stocks. But that starts to change when bond yields rise. ”