The S&P 500 continues to grind higher despite concerns about rising interest rates and higher bond yields. Investors can thank big tech stocks for that. And some strategists expect the trend to continue for the foreseeable future.

Thomas Carroll, equity strategist at Stifel, said in a report Monday that the S&P 500 could rise about 2% to 7,900 by year's end. But investors will have to pick their spots carefully.

Carroll expects that long-term bond yields will remain elevated thanks to Fed Chair Kevin Warsh's focus on inflation. The 10-year Treasury yield, now hovering around 5.3%, has put pressure on consumer discretionary and staples stocks.

It's a problem for many other sectors too. Market breadth, a measure of how many stocks are rising and hitting new highs versus those that are declining, has been weak lately. The market-cap-weighted S&P 500 is up 3.9% in the past three months thanks to a resurgence in the Magnificent Seven. But the Invesco S&P 500 Equal Weight ETF has fallen 2.1% during the same time frame.

As such, Carroll is more bullish on companies that can benefit from the artificial-intelligence revolution, such as chip stocks, as well as some cyclical energy, transportation and materials companies that would get a lift from spending on capital goods that "runs hot."

Carroll identified several stocks that Stifel analysts rate as a Buy and that he thinks should still do well despite rising rates. Semiconductor leaders Nvidia and Micron top his list, along with chip equipment firms KLA, Lam Research, Teradyne and Applied Materials.

Oil and gas producers APA and Diversified Energy also made the cut, as did transportation companies Old Dominion Freight Line and C.H. Robinson Worldwide and industrial/engineering firms Comfort Systems, Sterling Infrastructure and Valmont Industries.

Carroll calls it a "Tale of Two Economies" approach. Industrial spending remains red hot while consumers are being squeezed by persistent inflation.

Lisa Shalett, chief investment officer of Morgan Stanley Wealth Management, is also guardedly optimistic that the rally, despite its narrow breadth, will continue. Her mid-2027 target for the S&P 500 is 8,300, 7% above current levels.

She noted in a report Monday that more than 70% of the S&P 500 stocks are more than 10% below recent highs, but the S&P 500 is only about 1% below its all-time peak. "This amplifies the importance of stock selection and could present opportunities," she wrote, but conceded that higher rates could make more companies "possibly vulnerable" to downward earnings revisions.

But even if higher yields ultimately wind up hurting profits for consumer-oriented companies as well as rate-sensitive sectors like financials and bond proxies such as utilities and healthcare, the fact that the S&P 500 has so many tech companies at the top could keep the index afloat.

"While breadth, price action, and interest rates are currently suggesting potential trouble, one price momentum measure just flashed a favorable signal," said Jay Kaeppel, a senior research analyst with SentimenTrader, in a report Monday.

He was pointing to the strength of the iShares Russell 1000 Growth ETF, which counts six of the Mag Seven companies among its top 10 holdings, along with Broadcom and Micron, as a promising sign.

"Recently, the stock market has experienced some 'churning' under the surface, and a variety of near-term warning signs have emerged. Meanwhile, at exactly the same time, large-cap growth stocks have quietly surged," he wrote.

Yes, the broadening of the market rally may be on hiatus as bond yields climb. But that doesn't have to be bad news for investors. Focusing on sectors like tech, energy and materials that have momentum could prove profitable, even if the majority of stocks in the S&P 500 struggle.