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Bond Prices Fall As Stocks Rally

October 17, 2002

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NEW YORK (AP) _ Bond prices were lower Thursday as investors, encouraged by a strong rally on Wall Street, again shifted their focus to the equity market.

The price of the benchmark 10-year Treasury note dropped 23/32 point, or $7.19 per $1,000 in face value. Its yield, which moves in the opposite direction, climbed to 4.14 percent from 4.06 percent on Wednesday.

The 30-year Treasury bond fell 1 5/16 point, or $13.13 per $1,000 in face value, to yield 5.09 percent, up from 5.00 percent on Wednesday, according to Moneyline Telerate.

The Dow Jones industrial average closed up 239 at 8,275, its fourth triple-digit advance in six sessions. The Nasdaq composite index advanced nearly 40 points to 1,272. The Standard & Poor’s 500 index rose 19 points to 879. Analysts said investors, cheered by some better-than-expected earnings reports, were becoming more optimistic about the market.

In other trading Thursday, the benchmark 2-year note increased 1/8 point to 2.07 percent, up from Wednesday’s 2.01 percent. Intermediate maturities fell between 7/32 point and 15/32 point.

Yields on one-month Treasury bills were 1.64 percent as the discount was down 0.05 percentage point at 1.62 percent. Yields on three-month Treasury bills were 1.67 percent as the discount rose 0.01 percentage point to reach 1.63 percent. Six-month yields were 1.68 percent, as the discount gained 0.02 percentage point to 1.64 percent.

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

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds was 107 5/16. The average yield to maturity rose to 5.09 from 5.01 percent Thursday.

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