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Bond Prices Fall on Stock Surge

July 18, 2003

NEW YORK (AP) _ Bond prices traded lower, as investors sent stocks sharply higher fueled by Microsoft’s rosy outlook.

The price of the benchmark 10-year Treasury note declined 1/2 point, or $5.00 per $1,000 in face value. Its yield, which moves in the opposite direction, rose to 4.01, down from 3.94 percent late Thursday.

The 30-year Treasury bond fell 13/32 point, with the yield rising to 4.93, from 4.90 percent on Thursday, according to Moneyline Telerate.

The Dow closed up 137 points, or 1.5 percent, at 9,188.

The broader market also rallied. The Nasdaq composite index rose 10.48 points, or 0.6 percent, to 1,709.

The Standard & Poor’s 500 index advanced 12 points, or 1.2 percent, to 993.

In other bond trading, the benchmark 2-year note’s yield rose to 1.50 percent from 1.44 percent on Thursday. Intermediate maturities fell between 3/32 point and 1/2 point.

Yields on one-month Treasury bills were 0.83 percent as the discount remained unchanged to to 0.81 percent. Yields on three-month Treasury bills were 0.89 percent as the discount was up 0.01 percentage point to 0.88 percent. Six-month yields were 0.95 percent, as the discount remained virtually unchanged to 0.93 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 steady at 1.00 percent.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds fell 1/32 to 110 29/32 from 110 15/16. The average yield to maturity remained at 5.00 percent.

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