Decline in equity futures, indicating a pullback in tech stocks

U.S. equity futures fell on Monday, indicating losses for major indices, as rising bond yields raised fears that tech stocks look too expensive.

S&P 500-related futures fell 0.7%, indicating that the general market gauge will continue to decline after the New York opening bell. The benchmark index fell 0.7% last week. Tech-intensive Nasdaq-100 contracts fell 1.3%, and Dow Jones Industrial Average futures fell 0.6%.

Investors are betting the vaccine rollout and President Biden’s proposed $ 1.9 trillion stimulus package will accelerate the economic recovery later this year.

These expectations, combined with concerns about rising inflation and the prospect of an earlier-than-expected interest rate hike, have contributed to a sell-off in US government bonds in recent weeks. Falling bond prices lead to higher yields, which has fueled concerns that highfly stocks are starting to look less attractive than assets considered risk-free.

“As the yield increases, there is more demand for [government bonds] compared to other assets, ”said Hani Redha, portfolio manager at PineBridge Investments. “How much are you willing to pay for the stocks? If you are only getting a very low return on bonds, you should be prepared to pay a higher amount for stocks. But that starts to change when bond yields rise. ”