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US STOCKS-Nasdaq, S&P 500 end lower as U.S. yields rise; Disney lifts Dow

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Gertrude Chavez-Dreyfuss
·3 min read
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* Technology-related companies resume slide

* Discovery rises on strong paid streaming subscribersforecast(Updates to close, adds new analyst comment)

By Gertrude Chavez-Dreyfuss

NEW YORK, Feb 22 (Reuters) - The S&P 500 and Nasdaq closedlower on Monday as climbing Treasury yields and prospects ofrising inflation triggered valuation concerns, hitting shares ofhigh-flying growth companies.

The Dow industrials ended higher, boosted by a surge in WaltDisney Co shares.

U.S. benchmark 10-year Treasury yields were up at 1.37%on Monday. Since the beginning of February, 10-yearyields have risen about 26 basis points, on track for theirlargest monthly gain in three years.

Still, some analysts noted that the stocks pullback wasexpected after a torrid rally this year and in 2020.

"This is a small pulback primarily because stocks got alittle overheated and there are a few worries out there thatpeople are making mountains of out molehills," said BrianReynolds, chief market strategist, at Reynolds Strategy.

He cited worries about the rise in Treasury yields, butnoted that junk bond yields hit all-time lows last week,suggesting there has been a shift from the safety of Treasuriesto the riskiness of corporates among investors.

"That's bullish for stocks," he added.

Federal Reserve Chair Jerome Powell is scheduled to speakbefore the Senate Banking Committee on Tuesday, and investorsare expected to look for any potential changes to the centralbank's dovish outlook."What investors are grappling with ... is what does this(higher Treasury yields) mean from an inflation perspective.Because of that, there's a little bit of tantrum in the marketright now," said Lindsey Bell, chief investment strategist atAlly Invest, in Charlotte, North Carolina.

Shares of Apple Inc, Microsoft Corp,Alphabet Inc, Tesla Inc and Amazon.com Incresumed their slide from the previous week.

Largely upbeat fourth-quarter earnings had powered WallStreet's main indexes to record highs early last week, but therally lost steam, in part due to fears of a potential snag inU.S. vaccination efforts and inflation concerns emanating fromstimulus measures.

Unofficially, the Dow Jones Industrial Average rose29.08 points, or 0.09%, to 31,523.4, the S&P 500 lost30.2 points, or 0.77%, to 3,876.51 and the Nasdaq Compositedropped 341.42 points, or 2.46%, to 13,533.05.

The S&P 500 declined for five straight sessions, itslongest such streak in a year.

Value stocks have outperformed growth sharesin February, with investors betting on a rebound in industrialactivity and a pickup in consumer demand as countries roll outvaccines to tame the pandemic.

The S&P 500 industrials and financial sectorboth rose, while energy stocks surged on higheroil prices. [O/R

Discovery Inc jumped after the media company saidit was expecting 12 million global paid streaming subscribers bythe end of February, as coronavirus-led restrictions kept peopleat home.

Kohl's Corp gained after a group of activistinvestors nominated nine directors to the department storechain's board.

Principal Financial Group Inc added after a mediareport that activist investor Elliott Management Corp had takena stake in the life insurance company and planned to push forchanges.(Reporting by Gertrude Chavez-Dreyfuss in New York; Editing byMatthew Lewis and David Gregorio)