Tech stocks slammed as inflation fears mount

U.S. equity markets ended mixed Monday as tech shares pulled back on valuation concerns and cyclical names gained.

Mega-cap tech stocks including Apple Inc., Tesla Inc. and Microsoft Corp. were under pressure as inflation concerns caused bond yields to rise, weighing on growth names.

The 10-year yield climbed another 2.6 basis points to 1.37% and is now up 45.7 bps this year. Wall Street analysts worry a move above the 1.5% level would cause stock-market dislocations.

The rise in yields comes as the U.S. House of Representatives neared a vote on President Biden’s $1.9 trillion COVID-19 relief package. The bill’s passage would likely intensify investor worries about inflation coming in the months ahead as the trillions in COVID-19 relief make their way through the U.S. financial system.

Meanwhile, economically-sensitive sectors like industrials, financials and energy provided support.

The Dow Jones Industrial Average gained 29 points, or 0.09%, while the S&P 500 and the Nasdaq Composite were weaker by 0.77% and 2.46%, respectively.

Elsewhere, Boeing Co. has recommended airlines suspend flights of its 777 jets that use Pratt and Whitney PW4000 engines, made by Raytheon Technologies Corp., after a United plane’s engine broke apart in the skies over Denver on Saturday. U.K. Transporation Secretary Grant Shapps said Monday that 777s with PW4000 engines will be temporarily banned from entering U.K. airspace.

In deals, Goodyear Tire & Rubber Co. has agreed to buy rival Cooper Tire & Rubber Co. for $2.8 billion in cash and stock. The deal will pay Cooper Tire shareholders $41.75 per share in cash and .907 newly issued Goodyear shares for each Cooper Tire share they own.

Meanwhile, M&T Bank Corp. will acquire People’s United Financial Inc. for $7.6 billion, a 13% premium to Friday’s closing value, in stock. People’s United shareholders will receive 0.118 M&T Bank shares for each People’s United share they own.

Kohl’s Corp. shares rose after a group of activist investors with a combined 9.5% stake nominated nine directors to the department store chain’s board.