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Stocks Soar, Bonds Flat
February 4th, 2012 by Marc Prosser
The stock market crushed the bond market today. Moving the market was new jobs data, which came in stronger than expected. All three major stock indexes finished the day higher, turning in gains of 1.23% or higher. The bond market as represented by the two most widely held bond ETFs, closed slightly down, less than 0.2%
The S&P 500 (SPY) was 19 points higher yesterday at 1,334.90, up 1.46%. The bond market was almost flat as iShares Barclays Aggregate Bond ETF (AGG) finished 5 cents down at $110.56, 0.05% lower than the previous day. (note as bond prices fall, yields increase).The Dow Jones industrial Average (ETF: DIA) hit a 4 year high rising 156 points closing at 12,862, up 1.23%. In terms of individual stocks, big financial stocks rose in value on improved economic expectations. Bank of America, (BAC), Morgan Stanley (MS) and Citigroup (C) all produced gains in the neighborhood of 4-5 %. Outside of financials, a few companies rose on solid earnings including Tyson Foods (TLN), yes – the company that provides meats to your grocery store and Gilead Sciences (GILD)
In terms of the treasury bond market, the iShares Barclays 20 Year Treasury Bond Fund (TLT) fell $2.56 cents to $116.57. Junk bonds rose slightly as represent by the iShares iBoxx $ High Yield Corporate Bond Fund (HYG) ending higher 26 cents at $96.32. An improving economy creates inflationary pressures that could lead to higher interest rates. This cause the fall in long-term treasury prices. However, an improving economy will mean that junk borrower are less likely to default which helped Junk bond prices.