The S&P 500 and Nasdaq closed lower on Monday as climbing Treasury yields and prospects of rising inflation triggered valuation concerns, hitting shares of high-flying growth companies.
The Dow index ended slightly higher, lifted by a 4% surge in Walt Disney Co shares.
U.S. benchmark 10-year Treasury yields were up at 1.363%. Since the beginning of February, 10-year yields have risen about 26 basis points, on track for their largest monthly gain in three years.
Still, some analysts noted that the stocks pullback was expected after a torrid rally this year and in 2020.
“This is a small pulback primarily because stocks got a little overheated and there are a few worries out there that people are making mountains out of molehills,” said Brian Reynolds, chief market strategist, at Reynolds Strategy.
He cited worries about the rise in Treasury yields, but noted that junk bond yields hit all-time lows last week, suggesting there has been a shift from the safety of Treasuries to the riskiness of corporates among investors.