Wall Street at record highs as tech stocks bounce back

By Tanya Agrawal

REUTERS - U.S. stocks were higher in early afternoon trading on Monday, with the S&P 500 and the Dow Jones Industrial Average hitting record highs as technology stocks rebounded after recent losses.

The S&P technology sector is coming off its second straight weekly decline, triggered by fears of stretched valuations and investors moving money to other sectors. Tech stocks have led the S&P 500's 9.4 percent rally this year.

Apple rose 2.5 percent, providing the biggest boost to the three major sectors. Facebook and Alphabet were also higher.

The tech sector's 1.37 percent rise led the gainers on the S&P 500, putting it on track for its biggest one-day percentage rise since March.

"Some of it is folks taking a second-look at names that may have been unduly punished in the rotation out of tech that started about 10 days ago," said David Lefkowitz, senior equity strategist at UBS Wealth Management Americas in New York.

"There has been no change in the fundamentals for the tech sector. Earnings growth, earnings revisions and forward looking indicators remain healthy."

At 12:47 p.m. ET (1647 GMT), the Dow was up 115.2 points, or 0.54 percent, at 21,499.48, the S&P 500 was up 17.37 points, or 0.71 percent, at 2,450.52.

The Nasdaq Composite was up 75.64 points, or 1.23 percent, at 6,227.39.

While the tech sector is at the high end of its valuation, Lefkowitz said they were nowhere near the bubble territory of the 90s.

The S&P tech sector is trading at about 18.7 times forward earnings, compared with the historical 10-year average of 14.5, according to Thomson Reuters Datastream.

New York Fed President William Dudley, a close ally of Fed Chair Janet Yellen, said U.S. inflation was a bit low but should rise alongside wages as the labor market continues to improve, allowing the Federal Reserve to continue gradually tightening U.S. monetary policy.

Yellen's confidence as her team raised interest rates for the third time in six months last week surprised investors who had expected more caution about the economy following a set of weak U.S. economic data.

Advancing issues outnumbered decliners on the NYSE by 1,808 to 1,049. On the Nasdaq, 1,888 issues rose and 916 fell.

The S&P 500 index showed 49 new 52-week highs and 10 new lows, while the Nasdaq recorded 99 new highs and 87 new lows.

(Reporting by Tanya Agrawal; Additional reporting by Chuck Mikolajczak; Editing by Saumyadeb Chakrabarty)