Treasury yields touched a one-year high and U.S. stocks dropped after strong retail sales and producer-price data fueled optimism in the economy and stoked inflation worries.

The 10-year Treasury yield briefly climbed as high as 1.33% before paring its increase. The S&P 500 Index dropped for a second day. Companies that may have difficulty justifying stretched valuations if rising inflation dents profits bore the brunt of selling -- high-flying tech shares among them. Energy shares were higher.

“It’s quite possible that for a while interest rates could rise and yet stock prices could still rise some more because of the tailwinds from the fiscal stimulus, from folks who save money, and people wanting to get out,” said Tom Martin, senior portfolio manager at GLOBALT Investments. “So the tricky part is going to be figuring what level of interest rates will be supportive of stock prices either hanging in there and going higher or what level of inflation or interest rates will then start to become a worry for the market in terms of valuation.”

The dollar strengthened after a report showed January retail sales rose 5.3%, outpacing economists’ estimates of 1.1% growth. Crude oil pared gains after a report said Saudi Arabia will boost output.

The Stoxx 600 Index slipped amid a mixed bag of corporate results. Kering dragged retail shares lower after its Gucci brand missed estimates, and British American Tobacco Plc slid following its full-year results. Rio Tinto Group climbed after reporting a 20% jump in annual profit on a surge in iron ore prices.

The dramatic rise in bond yields has investors wondering afresh how high they can climb before spoiling the risk rally. That adds to concerns among some analysts that speculative froth may be setting equities up for a fall. Tobias Levkovich, Citigroup Inc.’s chief U.S. equity strategist, said a 10% pullback in U.S. shares is “very plausible” based on sentiment readings, valuations and earnings momentum.

Read More: Yield Surge Stirs Debate on Breaking Point for Everything-Rally

“The market is fairly frothy here from a sentiment perspective,” Liz Ann Sonders, chief investment strategist at Charles Schwab & Co., said on Bloomberg TV. “You have to put a move higher in yields that goes out of the comfort zone as a potential risk associated with that.”

Elsewhere, Bitcoin jumped past $51,000 for the first time. China remains shut for a week-long holiday and will reopen Thursday.

Here are some key events coming up:

• Earnings roll on with companies including Daimler, Credit Suisse, Deere, Danone and Nestle.
• Federal Open Market Committee minutes from the January meeting are due Wednesday.

These are some of the main moves in markets:

Stocks

The S&P 500 Index decreased 0.5% to 3,914.11 as of 11:08 a.m. New York time, the lowest in a week on the largest dip in almost three weeks.

The Dow Jones Industrial Average decreased 0.1% to 31,485.94, the biggest dip in almost three weeks.

The Nasdaq Composite Index decreased 1.2% to 13,882.90, the lowest in more than a week on the largest dip in almost three weeks.

The Stoxx Europe 600 Index decreased 0.7% to 416.23, the biggest dip in almost three weeks.

The MSCI All-Country World Index decreased 0.6% to 680.65, the largest dip in almost three weeks.

Currencies

The Bloomberg Dollar Spot Index increased 0.4% to 1,130.60, the highest in more than a week on the biggest climb in almost two weeks.

The euro decreased 0.6% to $1.203, the weakest in almost two weeks on the largest decrease in almost seven weeks.

The Japanese yen strengthened 0.1% to 105.89 per dollar, the first advance in more than a week.

The British pound decreased 0.4% to $1.3845, the largest decrease in more than a month.

Bonds

The yield on 10-year Treasuries fell three basis points to 1.28%, the biggest fall in a week.

Germany’s 10-year yield dipped two basis points to -0.37%.

Britain’s 10-year yield sank four basis points to 0.58%, the biggest tumble in more than three weeks.

Commodities

West Texas Intermediate crude increased 0.2% to $60.20 a barrel, the highest in more than two years.

Gold depreciated 1.1% to $1,774.67 an ounce, reaching the weakest in almost eight months on its fifth consecutive decline.

— With assistance by Stephen Spratt