Stocks falter, Treasury Yields jump as Fed hints at end of QE

February 29th, 2012 by

US indexes pared Tuesday’s gains today, though gains for February remain robust, after Fed Chairman Ben Bernanke hinted at ceasing further liquidity measures by ending quantitative easing. Yields on 10-year Treasuries rose above 2 percent from 1.94 percent within minutes after Bernanke started testifying before the Congress. In his testimony, which started at 10 am Wednesday, Bernanke said though expanding money supply is desirable, a speedy reduction in the jobless rate and high energy costs may fuel inflation further temporarily.

The Dow Jones Industrial Average (DJIA) slid 53.05 points, or 0.4 percent, to 12,952.07 though it gained on the month for the fifth time in a row. The blue-chip index closed over 13,000 on Tuesday and is up 2.5 percent in Feb. and 6 percent year-to-date. The S&P 500 (SPX) shed 6.5 points, or 0.5 percent to close at 1365.8 Wednesday. However, it has added 4.1 percent since January, its third month in the green zone on the trot. The tech-heavy NASDAQ Composite Index (COMP) declined 19.87 points, or 0.7 percent, to 2,966.89 though it added 5.4 percent for the month. This is the second straight monthly gain for the index.

US debt slumped to its first monthly decline since October though 30-year bonds had risen earlier as the Fed purchased $1.8 billion in longer-term securities. Yield on 10-year notes rose 0.03 percent, or three basis points, to 1.97 percent. US 30-year bond yields added one basis point to end at 3.09 percent. The iShares Barclays 20 Year Treasury Bond ETF (TLT) was down 0.61 percent on the day while the Vanguard Total Bond Market ETF (BND) shed 0.1 percent.

Meanwhile Apple (AAPL) shares advanced today, boosting the company’s market capitalization to over $500 billion for the first time in history. Shares of News Corp (NWSA) surged after the media firm announced James Murdoch’s resignation as executive chairman of the UK publishing unit. Costco Wholesale Corp (COST) jumped after sales and earnings topped forecasts for the fiscal second quarter.

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