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Bonds Prices Finished Higher

January 21, 2004

NEW YORK (AP) _ Bond prices finished higher Wednesday, despite gains in the stock market, fueled by strong bank earnings and new data showing more signs of a rebound in the economy.

The price of the benchmark 10-year Treasury note increased 1/4 point, or $2.50 per $1,000 in face value. Its yield fell to 4.02 percent from 4.06 percent Tuesday.

The 30-year Treasury bond increased 9/32 point to yield 4.91 percent, from 4.93 percent a day earlier, according to Moneyline Telerate. Bond prices and yields move in opposite directions.

The Dow closed up 95 points, or 0.9 percent, at 10,624.

The broader gauges were mixed. The Nasdaq composite index closed down 5.5 points, or 0.3 percent, at 2,142. The S&P 500 gained 9 points, or 0.8 percent, to 1,148.

The Commerce Department reported a 1.7 percent increase in housing construction in December, making 2003 the best year for home builders in 25 years. The reading surpassed the projections of analysts, who had expected a 6 percent decline.

J.P. Morgan Chase & Co. saw its shares increase $1.01 to close at $40.10 after reporting profits of $1.86 billion, well above Wall Street’s estimates.

In other trading, the benchmark 2-year note was up 1/32 point to 1.65 percent, down from 1.66 percent on Tuesday. Intermediate maturities ranged between up 1/8 point to up 7/32 point.

Yields on one-month Treasury bills were 0.76 percent as the discount fell 0.02 percentage point to 0.75 percent. Yields on three-month Treasury bills were 0.89 percent as the discount gained 0.01 percentage point to 0.87 percent. Six-month yields were 0.96 percent, as the discount was unchanged to 0.94 percent.

Yields are the interest bonds pay by maturity, while the discount is the interest at which they are sold.

The federal funds rate, the interest on overnight loans between banks, was unchanged from Tuesday at 1.00 percent.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds unchanged at 113 13/16. The average yield to maturity remained constant at 4.79 percent.

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