U.S. stock futures fell on Monday, pointing to losses for major indices, as rising bond yields raised concerns that tech stocks are looking too expensive.
Futures contracts linked to the S&P 500 fell 0.7%, indicating that the broad market indicator will continue to fall after the opening bell in New York. The benchmark dropped 0.7% last week. High-tech Nasdaq-100 contracts fell 1.3%, and Dow Jones Industrial Average futures fell 0.6%.
Investors are betting that the launch of vaccines and the $ 1.9 trillion stimulus package proposed by President Biden will accelerate the economic recovery later this year.
These expectations, combined with concerns about rising inflation and the prospect of rising interest rates earlier than expected, have contributed to a sale of US government bonds in recent weeks. The fall in bond prices results in increased yields, which has fueled concern that rising stocks are starting to look less attractive than risk-free assets.
“As productivity increases, there is more demand for [government bonds] in relation to other assets, ”said Hani Redha, portfolio manager at PineBridge Investments. “How much are you willing to pay for shares? If you are getting a very low yield on the bonds, you must be willing to pay a higher price for the shares. But that starts to change when bond yields go up. ”