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Tech stocks lifted the broader market higher on Friday after a key inflation gauge showed tame price pressures, easing fears of rapidly rising interest rates.

The Nasdaq Composite jumped 1.1% as Big Tech stocks, which sold off sharply in the previous session, rebounded. Apple, Amazon, Facebook and Microsoft all gained about 1%. The Dow Jones Industrial Average futures fluctuated between slight losses and gains. The S&P 500 gained 0.3%.

Investors breathed a sigh of relief after the personal consumption expenditures price index that the Federal Reserve watches indicated subdued inflation in January. The PCE index rose 0.3% for the month, slightly ahead of the 0.2% expectation but was up just 1.5% year over year, matching Dow Jones estimates. 

Treasury yields fell following the inflation data release. The 10-year yield dipped about 5 basis points to 1.47% after surging above 1.6% at one point on Thursday. The 10-year rate is up more than 50 basis points since the year began, a sharp rise for a bond rate used as a benchmark for mortgage rates and auto loans.

Popping interest rates alarmed equity investors and pushed the Nasdaq Composite to its worst session since October a day earlier. The Dow Jones Industrial Average dropped 559 points, pulling back from a record high. The S&P 500 lost 2.5% while the tech-heavy Nasdaq Composite shed 3.5%.

Economists and investment managers say the bond market is reacting to positive economics as vaccines are rolled out and GDP forecasts improve, which should benefit corporate profits. But the move could also signal faster-than-expected inflation ahead.

The sheer pace of the rise has also had the effect of dampening investors’ appetite for richly valued areas of the market. Higher rates reduce the value of future cash flows so they can have the effect have compressing equity valuations. Thursday’s jump in the 10-year yield also put it above the S&P 500′s dividend yield, meaning that equities — which are considered riskier assets — have lost that fixed-payment premium over bonds.

“Until recently, market participants have been able to digest the upward drift in long-term rates, but it appears that the next leg up in interest rates is a bigger bite to chew,” Charlie Ripley, senior investment strategist for Allianz Investment Management, said in an email.

“Looking at where real yields were at, they were simply too low when considering growth expectations, and it’s likely that long-term real yields will continue to drift higher as economic data improves,” he added.

Popular big-tech stocks like Alphabet, Facebook and Tesla, all of which began the year on strong footing, dropped 3.2%, 3.6% and 8% on Thursday. Apple, one of the largest, cash-heavy companies in the world, has seen its stock slide more than 15% over the last month.

Instead of tech, where companies tend to borrow more on average, investors are shifting money into so-called reopening trades, buying the stock of companies that would benefit most from the vaccine rollout and a return to regular travel and dining trends.

Energy has gained 6.8% this week alone, the biggest winner by far amid expectations that consumers around the world will soon be driving and flying as they were prior to the Covid-19 pandemic. Industrials and financials are the only two other sectors in the green week to date.

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

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