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NEW YORK: The Nasdaq index slipped more than 1% on Monday as investors swapped technology heavyweights for stocks linked to economic growth amid increasing confidence in a recovery. Four of the 11 major S&P sectors fell in early trading, with technology and communication services leading the losses.

Mega-cap growth names Alphabet Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc and Apple Inc slipped between 1.2% and 2.9%.

Chipmakers were down 1.3% as widening power shortages in China threatened to curb production.

A rise in the US 10-year Treasury yield towards levels last seen in June further weighed on technology stocks, given that their future earnings will be discounted in comparison to higher returns on debt due to increased lending rates.

On the other hand, rate-sensitive banking stocks gained 2.2%, while a jump in energy, and industrial shares pushed the blue-chip Dow up by 188.86 points, or 0.54%, at 34,986.86.

The small-cap Russell 2000 was up 0.8%.

Investors moved into value and cyclical stocks from tech-heavy growth names after the Federal Reserve last week indicated it could begin unwinding its bond-buying program by as soon as November, and may raise interest rates in 2022.

Although monetary tightening is frequently seen as a drag on stocks, some investors view the Fed's stance as a vote of confidence in the US economy.

"You're seeing sort of very broad top-line pressure on some of the things like technology shares. You might see that happening as the week goes on as well. That's going to be an everyday watch," said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC in New York.

"Interest in the cyclicals will continue to be at the forefront of investors minds as interest rates trend higher. This is the sort of go-to trade right now."

The S&P 500 Value index is down 0.5% so far this month, but still outperforming its growth counterpart.

Still, the benchmark S&P 500 index is on track to break its seven-month winning streak on concerns related to higher potential corporate taxes and China Evergrande's default.

Goldman Sachs strategists said the 2022 outlook for return-on-equity (ROE) on US stocks is more challenging as margins stabilize and corporate taxes rise.

At 9:44 a.m. ET, the S&P 500 was down 13.36 points, or 0.30%, at 4,442.12, and the Nasdaq Composite was down 162.58 points, or 1.08%, at 14,885.12.

After a solid rise in US core capital goods orders in August, investors will now watch for a raft of economic indicators, including inflation report and the ISM manufacturing index this week to gauge the pace of the recovery, as well as bipartisan talks over raising the $28.4 trillion debt ceiling.

Advancing issues outnumbered decliners by a 1.48-to-1 ratio on the NYSE and by a 1-to-1 ratio on the Nasdaq. The S&P index recorded 16 new 52-week highs and four new lows, while the Nasdaq recorded 38 new highs and 45 new lows.

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