As Treasury yields rallied after a hawkish tilt by the Federal Reserve last week, some of the world's largest tech companies continued to sell off. But the S&P 500 remained largely unchanged by the close of the US session.

Traders bet on a rate hike after Fed Chairman Jerome Powell said the central bank may start reducing bond purchases in November. Officials also updated their forecasts, where half of which said an increase in rates may be seen by the end of 2022. A spike in Treasury yields added concerns about high valuation of stocks, especially in the tech industry, leading to a bull market rally.

"Yields are rising sharply, reflecting investors' expectations about monetary tightening amid surging inflationary pressures," said Fawad Razaqzada, an analyst at ThinkMarkets. "If yields climb higher, this could weigh especially on the overstretched growth stocks in the technology sector, which have low dividend yields."

Meanwhile, Fed governor Lael Brainard said the labor market could soon meet the criteria to cut bond purchases, while the continued spread of the Delta strain could exacerbate inflation risks. New York Fed President John Williams noted that a modest purchase of bonds may soon be required, and his Chicago counterpart Charles Evans said he sees the first move in raising rates in 2023.

Also this week, Democrats in the House of Representatives are heading into a decisive battle over President Joe Biden's economic agenda - with a scheduled vote on a $ 550 billion infrastructure package that split the meeting in two and even more negotiations on a broader tax and spending plan.

Other important events to watch out for are:

- testimony of Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen at the Senate Banking Committee hearing (Tuesday);

- speech of ECB President Christine Lagarde at a forum (Tuesday);

- election of Japan's ruling party over its new leader (Wednesday);

- statements from Andrew Bailey (Bank of England), Haruhiko Kuroda (Bank of Japan), Christine Lagarde (ECB) and Jerome Powell (FRS) at the ECB forum (Wednesday);

- House Financial Services Committee hearing on coronavirus pandemic relief funding (Thursday);

- PMI data from China (Thursday);

- report on sentiment, output, construction costs, expenses and personal income in the US (Friday).