Tech stocks lifted the broader market higher in volatile trading on Friday, rebounding from heavy losses after a key inflation indicator showed tame price pressures.

The Nasdaq Composite rose 1.7% as Apple, Facebook and Microsoft each gained more than 2%. The tech-heavy benchmark swung wildly on Friday, even falling 0.7% at one point. The S&P 500 gained 0.6% while the Dow Jones Industrial Average fell 150 points, led by Salesforce and Chevron.

Some investors took comfort in the new reading of the consumer spending price index, which pointed to subdued inflation in January. The PCE index, which the Federal Reserve is closely monitoring, rose 0.3% for the month, slightly above expectations of 0.2%. However, it rose only 1.5% year-on-year and was in line with Dow Jones estimates.

Government bond yields initially fell after the inflation data was released, but later bounced back from their lows. The 10-year yield was last trading near 1.5% after rising above 1.6% at one point on Thursday. The 10-year interest rate has increased more than 50 basis points since the start of the year, a sharp increase for a bond rate that is used as a benchmark for mortgage rates and auto loans.

“When the market starts to believe that the Fed has somehow lost control of the bond market, all of this tantrum idea will crop up,” Art Cashin, director of floor operations at UBS, said on CNBC’s “Squawk” on the street on Friday . “

Falling interest rates alarmed stock investors, bringing the Nasdaq Composite to its worst session since October the day before. The Dow fell 559 points and pulled back from a record high. The S&P 500 lost 2.5% while the tech-heavy Nasdaq lost 3.5%.

Economists and investment managers say the bond market will respond to positive economic conditions as vaccines roll out and GDP projections improve, which should benefit corporate earnings. The move could also signal inflation faster than expected.

The sheer pace of the surge has also dampened investor appetites for highly valued areas of the market. Higher interest rates reduce the value of future cash flows, so they can compress stock valuations. With Thursday’s 10-year yield spike, it was also above the S&P 500’s dividend yield, meaning stocks – considered riskier assets – have lost that fixed-payment premium over bonds.

“Until recently, market participants could digest the uptrend in long-term interest rates, but it appears that the next hike in interest rates will be a bigger bite,” said Charlie Ripley, senior investment strategist at Allianz Investment Management. said in an email.

“Given where real returns have been, they were just too low given growth expectations, and it is likely that long-term real returns will continue to rise as economic data improves,” he added.

Popular big tech stocks like Alphabet, Facebook and Tesla, all of which started the year strong, fell 3.2%, 3.6% and 8%, respectively, on Thursday. Apple, one of the largest, cash-intensive companies in the world, saw its share price fall more than 15% last month.

Instead of technology, where companies borrow more on average, investors are investing money in so-called reopening businesses and buying stocks of companies that would benefit most from the introduction of the vaccine and a return to regular travel and hospitality trends.

Energy has increased 6.8% this week alone. This is by far the biggest winner as consumers around the world are expected to be driving and flying soon as they did before the Covid-19 pandemic. Industry and finance are the only other sectors in the Green Week so far.

The S&P 500 is down 2% so far this week while the Nasdaq is down 5%. The Dow Industrials is down 0.3%.

– CNBC’s Kevin Stankiewicz contributed to the coverage.

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