Treasuries edge lower ahead of Fed Meet; US stocks erase losses in late rally

(Bond Market Wrapup for October 22nd, 2012) – US Treasuries pared some of the prior session’s gains to drift lower Monday as investors chose to wait to see if the Federal Reserve changes the guidance it gives the markets about interest rates. The benchmark 10-year yield climbed three basis points, or 0.03 percentage point, to 1.79 percent ahead of the Fed’s policy-setting Open Market Committee meets on Tuesday and Wednesday. The yield on 30-year Treasury bonds rose one basis point to 2.95 percent in late afternoon trade, New York time.

Bond funds retreated for the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) shedding 78 cents, or 0.64 percent, to $120.96 while the Vanguard Total Bond Market ETF (BND) lost 12 cents, or 0.14 percent $84.56.

US stocks staged a late rally Monday erasing early losses after a recovery in the technology sector lifted major equity indexes. After last week’s tech meltdown on weak results by Google and Microsoft, the sector fought-back Monday, rising nearly one percent.

The Dow Jones Industrial Average (DJIA) added 2.38 points, or 0.02 percent, to 13,345.89, to recover from a 108 points plunge earlier. 18 of the 30 stocks within the blue-chip index finished lower as breadth turned negative. Hewlett Packard (HPQ), Caterpillar (CAT) and UnitedHealth Group (UNH) were among the Dow’s top gainers.

Caterpillar rose 1.6 percent after the heavy-equipment maker beat third-quarter earnings estimate but fell short on revenues while lowering its outlook for the year.

General Electric (GE), Microsoft (MSFT) and Verizon (VZ) were among the biggest percentage decliners

The S&P 500 Index (SPX) finished fractionally higher at 1433.81 with information technology pacing the gains and telecom, consumer discretionary and energy lagging among its 10 business groups.

The NASDAQ Composite Index (COMP) rose 11.34 points, or 0.4 percent, to close at 3016.96.

Winners were evenly paced with decliners on the NYSE.

Oil prices for December delivery dropped $1.79 to close at $88.65 a barrel.

Gold futures for December delivery rose $2.30 to $1,726.30 an ounce.

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