10-year Treasury yield near record low, stocks slide

(Bond Market Update for May 17th, 2012) Yield on Treasury 10-year notes headed towards record low as investors remained worried about Greece’s future in the single-currency union while economic reports suggested US recovery is faltering.

The yield on benchmark 10-year Treasuries dropped 6 basis points, or 0.06 percentage points, to 1.70 percent, the least since Sept 23 when yields sank to 1.67 percent.  30-year Treasury Bonds dropped 9 basis points to 2.81 percent, a level not seen since Dec. 20.

Bond Funds were up as well with the iShares Barclays 20 Year Treasury Bond ETF (TLT) soared $2.16, or 1.77 percent, to settle at $124.17, while the Vanguard Total Bond Market ETF (BND) gained 7 cents, or 0.08 percent to close at $84.14.

US stocks ended in red Thursday for the fifth day in a row with the Dow slipping for an 11th out of 12 sessions as the manufacturing index of the Philadelphia Federal Reserve shrank unexpectedly for the first time since Sep., to -5.8 in May from 8.5 in April.  The Dow Jones Industrial Average (DJIA) tumbled 156.06 points, or 1.2 percent, to 12, 5442. 49, with JPMorgan Chase (JPM) leading the laggard’s list after the New York Times reported that the bank’s trading losses have now widened to $3 billion. Discount-retailer Wal-Mart (WMT) jumped 4.21 percent after the firm reported better-than-expected first-quarter results. PC Maker Hewlett-Packard Co (HPQ) rose 0.1 percent over rumors that the company may cut as many as 30,000 jobs.

The S&P 500 Index (SPX) slipped 19.94 points, or 1.5 percent, to settle at 1304.86, the least in four months. Consumer discretionary dropped the hardest among the index’s 10 business group. Sears Holding Corp (SHLD) rallied 3.1 percent after the retailer reported smaller-than-expected losses and announced plans to sell part of Sears Canada business. The tech-heavy NASDAQ Composite Index (COMP) dropped 60.35 points, or 2.1 percent, to close at 2,813.69.

For every stock rising, five fell on the NYSE.

Crude oil futures for June delivery shed 25 cents to close at $92.56 a barrel.

Gold futures for June delivery jumped $38.30 to $1,574.90 an ounce.  

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