Treasuries drop on earnings/ECB hopes, Stocks extend gains

(Bond Market Recap for August 7th, 2012) Treasuries retreated on weak demand, pushing yields to the highest level since the beginning of July as better-than-expected corporate earnings bolstered views that the US recovery will survive despite the ongoing European turmoil.

Treasuries ticked lower as stronger risk appetite damped demand for safe haven assets. The benchmark 10-year yield climbed six basis points, or 0.06 percent, to 1.63 percent, the highest since July 2. Yield on 30-year treasury bonds rose seven basis points to 2.72 percent in late afternoon trade, New York time.

10 Year Treasury Yield – 1 Month Chart

Bond Funds were also down on the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) losing $1.64, or 1.29 percent, to end at $125.83, while the Vanguard Total Bond Market ETF (BND) shed 22 cents, or 0.26 percent to settle at $84.65.

TLT 1 Month Chart

US stocks closed higher Tuesday, extending gains for the third consecutive day with the NASDAQ closing above 3000 and the S&P 500 clipping the 1,400 mark for the first time since May on hopes the European Central Bank will intervene to halt further slide.   The Dow Jones Industrial Average (DJIA) climbed 51.09 points, or 0.4 percent, to finish at 13,168.60, after spiking more than 98 points during the day’s trade. The breadth remained positive with 21 of the Dow’s 30 components gaining, led by Boeing (BA) and JP Morgan (JPM).  Pfizer (PFE) and Johnson & Johnson (JNJ) were among the day’s biggest decliners after both the companies discontinued further studies on Alzheimer drugs that they were jointly developing.

Dow Jones Industrial Average 1 Month Chart

The S&P 500 Index (SPX) rose 7.12 points, or 0.5 percent, to 1401.35 with energy faring the best and utilities and healthcare grinding lower. The index settled over 1400 for the first time since May 1.  Accessories maker Fossil Inc (FOSL) surged 31.5 percent after it upgraded 2012 earnings forecast.  The tech-heavy NASDAQ Composite Index (COMP) added 25.95 points, or 0.9 percent, to close at 3015.86.

  • For every stock tracking lower, two advanced on the NYSE.
  • Oil prices for September delivery gained $1.47 to close at $93.67 a barrel.
  • Gold futures for August delivery shed $3.20 to $1,609.70 an ounce.
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