(Bond Market Wrapup for October 17th, 2012) – Treasuries retreated for the third straight session, their longest down streak in almost six weeks after new-home starts surged to a four-year high, reducing safe haven appeal of US debts. The 10-year benchmark yield climbed to the highest level in almost in a month after Moody’s reaffirmed its investment-grade status late Tuesday citing lower risk of losing market access due to the European Central Bank’s readiness to buy the country’s bonds.
The 10-year benchmark Treasury yield jumped nine basis points, or 0.09 percentage point, to 1.81 percent while yield on 30-year Treasury bonds rose seven basis points, or 0.07 percentage point, to 2.99 percent in late afternoon trade, New York time.
Bond funds slipped with the iShares Barclays 20 Year Treasury Bond ETF (TLT) shedding $1.13, or 0.93 percent, to $120.85 while the Vanguard Total Bond Market ETF (BND) lost 21 cents, or 0.25 percent to finish at $84.59.
US stocks finished marginally higher Wednesday as robust new-home construction data masked disappointing results from technology bellwethers like Intel and IBM.
The Dow Jones Industrial Average (DJIA) climbed 5.22 points, or 0.04 percent, to 13,557, extending gains for the fourth straight day. International Business Machines (IBM) was the biggest percentage decliner, slipping 4.9 percent after the tech-giant reported lower than expected third quarter revenues late Tuesday. Intel Corp (INTC) slumped 2.5 percent after the chipmaker projected a fourth-quarter profit margin than fell short of expectations. Breadth within the blue-chip index continued to be positive with winners beating laggards 23 to 7.
Homebuilder stocks rallied after a Commerce Department report showed new-house construction soared 15 percent to an 872,000 annual rate in September, the highest since July 2008 and easily beating forecasts by Wall Street.
Homebuilder Hovnanian Enterprises (HOV) vaulted 9.3 percent while PulteGroup Inc (PHM), the largest US homebuilder by revenue, jumped 5.3 percent. Beazer Homes USA Inc (BZH) rose 5.4 while Lennar Corp (Len) added 2.2 percent.
Dow component Bank of America (BAC) eased 0.2 percent after the lender reported lower profits on account of many charges.
The S&P 500 Index (SPX) rose 5.99 points, or 0.4 percent, to 1460.91 with utilities gaining the most and technology faring the worst among its 10 business groups.
The tech-heavy NASDAQ Composite (COMP) added a meager 2.95 points, or 0.1 percent, to close at 3104.12, marking its third straight day of gains.
For every stock declining, more than two advanced on the NYSE.
Oil prices for November delivery dropped 20 cents to close at $91.89 a barrel.
Gold futures for December delivery rose $6.70 to $1,753 an ounce.