Treasuries rise as weak jobs data fuels Fed bets, Stocks edge up

(Bond Market Wrapup for September 7th, 2012) US government securities rose for the first time in four days as weaker-than-estimated jobs data  fueled bets the Federal Reserve will add more monetary stimulus to the economy through bonds purchases as early as next week.

Treasury five- and seven-year notes led the day’s gainers amid speculations that mortgage investors would look at Treasuries for hedging as the Fed initiates another round of similar-maturity housing bonds purchase through the so-called quantitative easing program. The benchmark 10-year Treasury yield dropped two basis points to 1.66 percent while 30-year Treasury bond yields lost seven basis points in late afternoon trade, New York time.

10 Year Treasury Yield – 1 Month Chart

Bond funds were mixed on the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) shedding .78 points, or 0.62 percent, to end the week at $123.83 while the Vanguard Total Bond Market ETF (BND) remained unchanged over yesterday’s close at $84.74.

US stocks closed marginally higher Friday with the major indexes finishing the week higher for the first time in three weeks amid hopes the Federal Reserve will restart its bond buying program next week after the European Central Bank satisfied the markets with an open-ended bond buying program.  The Dow Jones Industrial Average (DJIA) climbed 14.64 points, or 0.1 percent, to 13,306.64, up 1.7 percent for the week and finishing its highest level since December 2007. Breadth within the 30-component blue-chip index remained evenly poised with half finishing higher for the day. Bank of America (BAC) led the day’s gainer, jumping 5.4 percent for the day while Caterpillar (CAT) surged 3.9 percent.  Kraft Foods (KFT) sank 5.5 percent after the company warned earnings for its snack business Mondelez International may be lower due to unfavorable currency exchange rates.

Dow Jones Industrial Average 1 Month Chart

The S&P 500 Index (SPX) rose 5.8 points, or 0.4 percent, to 1437.92, up 2.2 percent over last Friday. Materials led the advancers while consumer stocks fronted the decliners among its 10 business groups. Alpha Natural resources soared 17 percent as steel and mining companies outperformed amid merger talks, better commodity prices and higher demand from China.

The tech-heavy NASDAQ Composite (COMP) finished fractionally higher on the day, adding 0.6 point to close at 3136.42 points. The index is up 2.3 percent on the week and posted its highest finish since November 2000. Lululemon (LULU) surged more than 12 percent while Intel (INTC) slid 3.6 percent after the chipmaker lowered third quarter revenue forecasts citing challenging macroeconomic environment.

  • For every stock declining, more than two gained on the NYSE.
  • Oil prices for October delivery gained 76 cents to close at $96.29 a barrel.
  • Gold futures for December delivery jumped $32 to $1,737.60 an ounce.
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