Treasuries advance for 4th day on Europe and China fears, US stocks slide

(April 23rd 2012) Yield on 10-year benchmark bonds dropped to a near two-month low as Treasuries rose for the fourth day over concerns that a prolonged EU slow-down will affect US recovery, spurring demand for safe assets.

The yield on 30-year bonds dropped to the lowest in nearly seven weeks ahead of the Fed’s two-day policy meeting from tomorrow. The 30-year bond yield sank four basis points to 3.08 percent Monday, the lowest since March 6, before the Federal Reserve auctions $99 billion in debt, starting tomorrow. Benchmark 10-year yield dropped0.03 percentage points, or 3 basis points to 1.93 percent over renewed EU worries.

The iShares Barclays 20 Year Treasury Bond ETF (TLT) rose 0.85 points, or 0.73 percent Monday, while the Vanguard Total Bond Market ETF (BND) gained 0.10 points, or 0.12 percent over Friday’s close.

US stocks tumbled Monday as political turmoil in Europe and another slowdown in China spooked investors, pulling the three indices down. Europe continued to dominate the headlines with French President Nicholas Sarkozy coming second in the first round of elections behind socialist candidate Francois Hollande, who has been averse to austerity measures. The Netherlands plunged into political crisis after the Dutch coalition government collapsed, jeopardizing the country’s coveted AAA rating. A slowdown in the Chinese manufacturing sector didn’t help investor moods either ahead of a week that is expected to be busy on the economic and earnings front.

The Dow Jones Industrial Average (DJIA) slipped 102.09 points, or 0.8 percent, to 12,927.17, with retailer Wal-Mart (WMT) dragging the blue-chip index down after news of its attempted bribery efforts in Mexico hit the markets. 27 of the 30 components of the Dow tumbled, with the discount retailer sinking 4.7 percent, its biggest intra-day loss since August.

The S&P 500 Index (SPX) lost 11.59 points, or 0.8 percent, to 1366.94 with consumer staples suffering the most while energy performed the best among all the sectors. Kellogg Co (K) retreated the most, losing 6.1 percent on the day, while SunTrust Banks Inc (STI) topped the charts with a 2.8 percent gain over better-than-expected earnings.

The tech-heavy NASDAQ Composite Index (COMP) dropped 30 points, or 1 percent, to close at 2970.45 after Apple Inc (AAPL) shed 0.2 percent in a volatile market.

Decliners outpaced advancers by three-to-one on the NYSE.

Oil prices for June delivery dropped 77cents to settle at $103.11 a barrel on the New York Mercantile Exchange.

Gold futures for June delivery shed $10.20 to close at $1,632.90 an ounce.

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