US stocks couldn’t hang on to an early gain and finished mostly lower Monday as technology companies slipped. Bond prices continued to fall, and the yield on the 10-year Treasury note drew closer to 3 percent, a milestone it hasn’t reached since January 2014.
Investors once again focused on corporate deals as the utility company Vectren agreed to be bought by CenterPoint Energy for $6 billion, while the CEO of Sears called for that company to sell more assets and the health care products company Henry Schein said it will split off its animal health unit. Aluminum producers tumbled after the Treasury Department moved to ease sanctions against Russian aluminum company Rusal.
Stocks have faded over the last few days as bond yields have continued to climb. The yield on the 10-year Treasury note continued to trade at four-year highs, rising to 2.98 percent from 2.96 percent. Bond yields have climbed this year as investors start to see signs that inflation is picking up and the Federal Reserve continues to raise interest rates. The 10-year yield stood at 2.43 percent at the end of 2017.
Since the 2008-09 global financial crisis, low inflation expectations and a bond-buying program by the Federal Reserve have helped keep bond yields low. That pushed stocks higher by making bonds less appealing by comparison. With the Fed no longer buying bonds and investors expecting greater inflation, analysts say higher yields could make bonds more attractive.
Duane McAllister, senior portfolio manager for Baird Advisors, doesn’t think rising yields are a problem for the stock market. He said they are an opportunity for investors to diversify their holdings at a time of increased market volatility.
‘‘Three percent is an important milestone on the continued trend toward higher interest rates,’’ he said. ‘‘It shouldn’t lead anyone, whether you’re an individual investor or an institutional investor, to run for the hills.’’
The S&P 500 index rose 0.15 points to 2,670.29. It rose as much as 12 points before midday. The Dow Jones industrial average fell 14.25 points, or 0.1 percent, to 24,448.69. The Nasdaq Composite gave up 17.52 points, or 0.2 percent, to 7,128.60. The Russell 2000 index of smaller-company stocks declined 2 points, or 0.1 percent, to 1,562.12.
Earlier this month, a Bank of America Merrill Lynch Global Research survey of fund managers concluded that if the 10-year yield rises to 3.50 percent, investors will start buying bonds while selling stocks. And when bond yields rise, it pushes up interest rates on mortgages and other kinds of loans, making it more expensive to borrow money. That can slow economic growth.
Aluminum companies fell sharply after the Treasury Department extended a deadline for US companies to stop doing business with Rusal. The department also said it could change its stance on sanctions against the Russian aluminum company if billionaire Oleg Deripaska gives up control. Earlier this month, the United States imposed sanctions that bar citizens from doing business with numerous Russian businessmen, including Deripaska, as well as several Russian officials and companies. That followed US frustration with Russian policy in Syria and Ukraine, as well as alleged interference in the 2016 US elections.
Alcoa plunged 13.5 percent, and Century Aluminum gave up 53 percent. The stocks had rallied after the sanctions were announced.
Walmart fell 1 percent after Bloomberg reported the retailer might spend $12 billion to buy the majority of Indian e-commerce company FlipKart.
The CEO of Sears, Eddie Lampert, called for the struggling retailer to sell the Kenmore brand and its home improvement business. ESL Investments, Lampert’s hedge fund, said it might buy the home improvement assets and is willing to make an offer for Kenmore. Sears has been closing stores, cutting costs, and selling brands as its sales fall. Its stock rose 7.6 percent.
Health care products company Henry Schein jumped after it said it will spin off its animal health business. That division will combine with Vets FirstChoice as a new publicly traded company, and Henry Schein expects to get at least $1 billion in cash from the tax-free move. The stock gained 6.8 percent.
Benchmark US crude oil reversed an early loss and rose 0.4 percent to $68.64 a barrel in New York. Brent crude gained 0.9 percent to $74.71 in London. That helped energy companies finish higher.