By Anna Hirtenstein 

U.S. stocks wobbled Monday and a selloff in U.S. government bonds extended into its sixth week following progress toward a new fiscal stimulus bill that brightened economic prospects and sapped demand for technology stocks.

The S&P 500 climbed 0.3%. The benchmark rose 0.8% last week, a volatile period during which investors rotated out of big technology stocks.

The Dow Jones Industrial Average rose 0.6%, and the Nasdaq Composite fell 0.2% as tech stocks extended their losses.

In the bond market, the yield on benchmark 10-year US. Treasurys ticked up to 1.591% as investors moved funds out of assets considered to be the safest in the world. Yields rise when bond prices fall. It had ended Friday at 1.551%, its highest since February 2020.

President Biden's $1.9 trillion Covid-19 relief plan was approved in the Senate over the weekend and faces a vote in the House as early as Tuesday. The additional fiscal spending is expected to bolster the pace of economic recovery and boost inflation. As the outlook brightens, money managers are moving out of government bonds and technology stocks and into sectors such as banks and energy that are likely to rebound with the economy.

"Stimulus checks into people's bank accounts will be a big propeller of growth, given the consumer in the U.S. makes up such a big part of U.S. growth," said Shaniel Ramjee, a multiasset fund manager at Pictet Asset Management. "The underlying strength of the U.S. economy, growing expectations that the stimulus gets fully passed, plus inflation expectations rising because of oil: these are all likely to continue to push bond yields higher."

Tech stocks have been retreating in recent weeks as vaccination programs advance and economic data point to the recovery being under way. The Nasdaq Composite Index declined more than 2% last week, losing ground for a third consecutive week. That is because investors are betting that the largest media, communications and online-shopping companies will see a slower pace of growth as pandemic lockdowns end.

Giant tech stocks including Apple, Microsoft and Alphabet fell after the opening bell. Apple, the biggest company on the S&P 500 by market value, has dropped more than 8% this year. Shares of Tesla, the electric-vehicle maker that was also a favorite among individual investors last year, slid 1.4% Monday morning. It has lost more than 15% so far in 2021.

"The main market element is what's happening in the yield market: The U.S. tech side is suffering from the current normalization in the cost of capital," said Samy Chaar, chief economist at Lombard Odier. "The market is currently acknowledging that we're in a recovery. Flows are rebalancing to better reflect this cyclical recovery."

Among other stocks, General Electric rose 3.8%. The Wall Street Journal reported that the industrial conglomerate was nearing a $30 billion deal to combine its aircraft-leasing business with Ireland's AerCap.

Investment firm Athene Holding soared over 10% after it said it would combine in an all-stock deal with Apollo Global Management.

Overseas, the pan-continental Stoxx Europe 600 rose 1.3%, led by banking stocks. Europe's stock market is benefiting from investors rotating into value stocks, analysts said.

In Asia, most major benchmarks fell. The Shanghai Composite dropped 2.3% and Hong Kong's Hang Seng Index declined 1.9% as investors grappled with signs that Chinese policy makers will take more action to rein in debt and prevent asset bubbles from forming.

Amber Burton contributed to this article.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com

(END) Dow Jones Newswires

March 08, 2021 10:17 ET (15:17 GMT)

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