(AP) -- Stocks were once again moving lower in early trading Wednesday as another rise in bond yields gave investors pause. Investors will be watching for comments from Federal Reserve Chair Jerome Powell as well as updates on President Joe Biden's stimulus package to see where the economy goes from here.
The S&P 500 index was down 0.3% as of 10 a.m. Eastern. The Dow Jones Industrial Average fell 0.2% and the technology-heavy Nasdaq Composite, which has taken a bigger blow in recent days from rise in bond yields, was down 0.8%.
Treasury yields continued to climb, adding to a multi-week increase in rates that are used as benchmarks for many kinds of loans including corporate debt and traditional 30-year mortgages. The yield on the 10-year Treasury note rose to 1.42%, the highest level in just over a year.
The rise in bond yields has several implications for both the stock market and overall economy. Higher yields make stocks with lofty valuations less attractive. Those types of stocks tend to be technology companies, who are priced typically for growth and not for a steady return of dividends like mature companies like makers of consumer staples, utilities and real estate.
Apple, Microsoft and Amazon shares were all down 1% or more. Those companies rocketed in 2020 as investors bet that the pandemic would cause Americans to shift shopping habits and buy gadgets to keep themselves occupied in pandemic quarantines.
Bank stocks, which were hurt by lower interest rates last year, rose in early trading. The KBW Bank Index of 50 large banks was up 1.4%, despite the overall market being down. Banks would see higher profits if interest rates were to keep rising. Another dose of stimulus would also shore up the balance sheets of many Americans.
The bond market could also be a harbinger for inflation, something that has been nonexistent in the U.S. for the better part of a decade. Powell told Congress Tuesday the Fed didn't see a need to alter its policy of keeping interest rates ultra-low, noting that the economic recovery "remains uneven and far from complete." He will deliver a second day of testimony Wednesday.
"Rising borrowing costs remain the prevalent issue on hand though Fed Powell's dovish remarks had helped to arrest the fall for U.S. equities on Tuesday," Jingyi Pan of IG said in a commentary.
The U.S. House of Representatives is likely to vote on President Biden's proposed stimulus package by the end of the week. It would include $1,400 checks to most Americans, additional payments for children, and billions of dollars in aid to state and local governments as well as additional aid to businesses impacted by the pandemic.