The Dow Jones Industrial Average rose for the first time in three days on Monday, but its gains were kept in check as investors continued to fret over a sharp rise in interest rates.
The 30-stock index climbed 39.73 points to 26,486.78, led by gains in Walgreens Boots Alliance. The S&P 500, however, closed just below breakeven at 2,884.43 to post a three-day losing streak. The Nasdaq Composite also pulled back 0.7 percent to 7,735.95, posting its third straight losing session, as large-cap tech shares fell.
Shares of Amazon fell 1.3 percent while Netflix pulled back 0.6 percent. Apple also dipped 0.2 percent.
Interest rates were on a tear last week after the release of several pieces of strong economic data. The benchmark 10-year Treasury note yield rose to above 3.2 percent from around 3.06 percent. The 10-year yield also hit its highest level since 2011 last week.
"The rise in interest rates was sparked by signs that the economy is beginning to run hot," said Bruce Bittles, chief investment strategist at Baird. "Looking forward, profit margins could come under stress due to rising interest rates, rising wages, four-year highs in energy costs and a strong dollar. We recommend investors concentrate on the strongest sectors including health care and industrials."
On Friday, the U.S. government said the unemployment rate in the U.S. fell last month to a level not seen in close to 50 years. Overall jobs creation disappointed for last month, but that was offset by sharp upward revisions for the number of jobs created in August and July. Data released last week also showed the U.S. services sector expanded at its fastest pace on record last month.
Federal Reserve Chairman Jerome Powell also said last week monetary policy is "a long way" from neutral, signaling more rate hikes are coming. The Fed has already raised rates three times this year and is forecast to hike once more before year end.
"Interest rate risks remain clearly to the upside," strategist at MRB Partners said in a note. "The Fed remains on a gradual tightening path, but pressure to accelerate will likely escalate."