(Bond Market Wrapup for September 25th, 2012) – US government securities extended gains Tuesday with 30-year Treasury bonds rising for the seventh straight day, its longest winning streak in almost four years after the Philadelphia Federal Reserve Bank Chairman Charles Plosser, a known monetary hawk, said the US economy is unlikely to benefit from the latest round of assets purchase.
The benchmark 10-year Treasury yield fell four basis points, or 0.04 percentage point, to 1.67 percent after rising to 1.73 percent earlier as data showed US consumer confidence and home prices climbed while a separate reading from the Richmond Fed showed regional manufacturing activity improved in September. Yield on 30-year Treasury bonds dropped four basis points to 2.85 percent in late afternoon trading, New York time.
Bond funds extended gains for yet another session with the iShares Barclays 20 Year Treasury Bond ETF (TLT) jumping $1.21, or 0.99 percent, to $123.71 while the Vanguard Total Bond Market ETF (BND) gained 17 cents, or 0.20 percent to close at $84.98.
US stocks traded lower Tuesday to end at a two-week low despite positive reports on consumer confidence and US housing after a nonvoting Federal Reserve member said Bernanke’s latest move to buy more assets may not yield much result.
The Dow Jones Industrial Average (DJIA), despite rising 61 points, ended 101.37 points, or 0.8 percent, lower at 13,457.55. Breadth within the index turned negative with 25 of the 30 components closing lower, led by Caterpillar (CAT). The heavy equipment maker shed 4.25 percent after revising its earnings forecast downwards.
Johnson & Johnson (JNJ) and Home Depot (HD) featured among the day’s handful gainers.
The S&P 500 Index (SPX) shed 15.3 points, or 1.1 percent, to 1441.59, posting its fourth straight session of losses. All the 10 business sectors finished lower with financials and technology sinking the most.
The NASDAQ Composite Index (COMP) crashed 43.05 points, or 1.4 percent, to close at 3117.73, its biggest drop since June 25.
Decliners stayed ahead of winners 11-to-4 on the NYSE.
Oil prices for November delivery shed 56 cents to close at $91.37 a barrel.
Gold futures for December delivery rose $1.80 to $1,766.40 an ounce.