Technology companies led stocks lower on Wall Street Wednesday as another rise in bond yields rattled investors. Higher bond yields can signal that inflation could be on the way as the economy picks up—and many believe the economy this year could see a rebound with growth coming in at the strongest pace since 1984, the AP reports. The higher yields can also make stocks that have made huge gains, like many of the Big Tech companies, look expensive. The yield on the benchmark 10-year Treasury rose to 1.46% from 1.41%. The S&P 500 fell 50.57 points, or 1.3%, to 3,819.72. The Dow Jones Industrial Average fell 121.43 points, or 0.4%, to 31,270.09. The Nasdaq fell 361.04 points, or 2.7%, to 12,997.75.
When bond yields rise quickly, as they have in recent weeks, that forces Wall Street to rethink the value of stocks, making each $1 of profit that companies earn a little less valuable. Technology stocks are most vulnerable to this reassessment, in large part because their recent dominance left them looking even pricier than the rest of the market. On the flipside, banks benefit when bond yields rise, because it allows them to charge higher rates on mortgages and many other kinds of loans. Financial sector stocks bucked the broader market slide Wednesday. "The good news to remember is there are other groups taking the baton," said Ryan Detrick, chief investment strategist for LPL Financial, adding that "higher inflation at the beginning of a new economic expansion is perfectly normal."
(Read more stock market