Treasuries fall on strong ISM data, Dow hits highest level since 2007

May 1st, 2012 by

Treasury yields climbed from near three-month lows after two regional Federal Reserve presidents said the central banks may be forced to raise interest rates earlier than forecast.

An industry report also showed US manufacturing expanded unexpectedly in April and Chinese manufacturing recovered for the fifth straight month, dispelling concerns of a so-called hard landing. The benchmark 10-year Treasury yield rose 0.04 percentage point, or 4 basis points, to 1.95 percent, briefly touching 1.90 percent before the Institute for Supply Management data for April had come in.

The Vanguard Total Bond Market ETF (BND) slipped 31 cents, or 0.37 percent over Monday’s close to finish at $83.61 while the iShares Barclays 20 Year Treasury Bond ETF (TLT) lost 91 cents, or 0.77 percent, ending at $116.41 for the day.

Concerns of an economic slowdown was offset after the ISM data indicated that US manufacturing expanded in April, pushing US stocks higher Tuesday. The Dow Jones Industrial Average hit its highest level since 2007 on hopes that the jobless rate report due later this week will show US hiring rose last month.
The Dow Jones Industrial Average (DJIA) closed 65.69 points, or 0.5 percent, higher at 13,279.32, after surging as much as 125 points during the day’s trade. Today’s finish marked the blue-chip indexes highest ending since Dec 2007. Stocks of online photo-sharing firm Shutterfly (SFLY) rose after the company beat first-quarter estimates and upgraded guidance for the remainder of the year. Chesapeake Energy (CHK) climbed after Chairman and CEO Aubrey McClendon announced he will terminate the controversial bonus that allowed him take personal equity in company-drilled oil wells. Oil major BP (BP) slumped after quarterly earnings missed street estimates.

The S&P 500 Index (SPX) rose 7.91 points, or 0.6 percent, to 1405.82 with energy fronting the day’s gainers in the 10-sector index. Sears (SHLD) soared 14 percent after the retailer upgraded its outlook for 2012 and said it expected to post profit in Q1 against analysts’ expectation of a loss. The NASDAQ Composite Index (COMP) climbed 4.08 points, or 0.1 percent, to close at 3050.44. For every stock declining, nearly two advanced on the NYSE.

Crude futures for June delivery gained $1.29 to close at $106.16 a barrel.

Gold futures for June delivery tumbled $1.80 to close at $1,662.40 an ounce.

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