Big tech and small-cap stocks pulled back on Monday, as Treasury yields rose and investors continued to digest Friday’s stronger-than-expected jobs report.
Investors were responding by pivoting to more cyclical stocks from big tech on Monday, according to Lara Castleton, U.S. head of portfolio construction and strategy at Janus Henderson Investors.
Fed-fund futures traders were pricing in a 30.9% likelihood that the Fed will keep its key interest rate unchanged this year, according to the CME FedWatch tool. That was up from 16% a week ago.
Meanwhile, higher interest rates were weighing on shares of small-cap companies, as their fortunes tend to be more vulnerable to higher financing costs than their large-cap peers.