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Stocks fall as investors mull inflation concerns, recovery

Business

In this photo provided by the New York Stock Exchange, trader Neil Catania works on the floor, Monday Feb. 22, 2021. Investors remain focused on the future of global economies badly hit by COVID-19 and the potential for more stimulus to fix them. (Courtney Crow/New York Stock Exchange via AP)
By DAMIAN J. TROISE AP Business Writer

Stocks fell in afternoon trading on Monday, adding to the declines that started last week as investors continue to be concerned about rising interest rates and the potential for inflation down the road.

The S&P 500 was down 0.3% as of 1:01 p.m. Eastern, pulled down by technology and health care companies which have done well over the past year. The Dow Jones Industrial Average rose 101 points, or 0.3%, to 31,595 after edging lower earlier in trading. The technology-heavy Nasdaq fell 1.5%.

Investors remain focused on the future of global economies badly hit by COVID-19 and the potential for more stimulus to fix them. The U.S. House of Representatives is likely to vote on 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.

But the large amount of stimulus being pumped into the economy has given some investors pause as worries of inflation have reentered the market after being nonexistent for more than a decade. Yields on U.S. Treasury bonds and notes have risen in the last several weeks as investors have predicted more inflation would come with the economic recovery.

“There are some risks out there,” said Gary Schlossberg, global strategist at Wells Fargo Investment Institute. “The issue is are we just normalizing back to where we were before the pandemic or are we talking about a sea change.”

The yield on the 10-year Treasury rose to 1.35% from 1.34% late Friday and has been rising steadily throughout the year. The higher yields have helped lift banks, which rely on higher yields to charge more lucrative interest on loans. Bank of America rose 1.7%.

There was a lot of churn within different sectors just behind the broader market losses. The S&P 500 was just about evenly split between winners and losers.

Energy companies made solid gains as crude oil prices rose more than 3%. Exxon Mobil gained 4.4% and Chevron rose 3.6%.

Airlines, which have been battered by the virus pandemic, rose after Deutsche Bank upgraded its view on the sector and the potential for recovery as COVID-19 cases fall and vaccination rates increase. American Airlines jumped 11.5%, while both Delta and United Airlines rose more than 6%.