Stocks Rise Again, and Bond Yields Follow

Stocks ground out yet another day of solid gains Monday, helped by more good economic news, but still fell short of the technically meaningless Dow 11,000 level. Meanwhile, the yield on the 10-year Treasury note, which serves as the benchmark for everything from corporate debt to mortgages, hit 4% for the first time since June before easing to close below that key level.

With the market shut for the Friday holiday, investors had an extra day to digest the good-but-not-great hiring data, which dovetailed nicely with Monday's better-than-expected reading on the service sector and a surprise jump in pending home sales. Traders took the trifecta of data as confirmation that the economic recovery is taking root, bidding shares broadly higher.

"If last week's data points on jobs and gains in manufacturing weren't enough to convince fence-sitters to hit the bid on the risk recovery trade, today's economic data might very well have helped them get closer to making a decision," John Stoltzfus, market strategist at Ticonderoga Securities, said in a note to clients.

The blue-chip Dow Jones Industrial Average ($INDU) rose 46 points, or 0.4%, to close at 10,974, while the broader S&P 500 ($INX) added 9 points, or 0.8%, to 1,187. The tech-heavy Nasdaq Composite ($COMPX) rose 27 points, or 1.1%, to finish at 2,430.

But better news on the economic front helped pressure bond prices Monday, as concerns mounted that expansion would force a sooner-than-expected Federal Reserve rate hike to forestall inflationary pressures. (Bond prices fall when interest rates rise.) Bond traders also had to contend with Treasury flooding the market with supply, since the government is auctioning $82 billion in debt this week.

That lifted bond yields, which move in the opposite direction of prices. The yield on the 10-Treasury touched 4% in early afternoon trading before settling at 3.99%.