NEW YORK (AP) - Investors moved out of Treasury bonds on Thursday as a rally in stocks sent the Dow Jones industrials up nearly 190 points.
The sharp move in equities cut short a rise in Treasury prices earlier in the session. Wall Street remained nervous about the economy and the Federal Reserve's next steps, and that originally increased demand for government securities.
The rising dollar and falling oil prices also discouraged bond investors. Government debt is considered to be a safe-haven investment during rocky economic times.
The reversal in the bond market was largely reactive to the stock advance, but fixed-income investors overall remain worried about the economy. They were largely disappointed after the Federal Reserve, which cut interest rates by a quarter point on Wednesday, did not provide the kind of clarity on its next move that some investors had hoped for.
'The market is digesting what happened with the Fed, and market participants are trying to determine what the true message is. ... It was all a bit clouded,' said Tom di Galoma, head of Treasurys trading at Jefferies & Co. 'Investors are caught between the Fed decision and the jobs data.'
Analysts expect the Labor Department's employment report on Friday will show that 75,000 jobs were lost in April, boosting the unemployment rate a notch to 5.2 percent.
Investors trying to determine where the economy is headed weren't nervous enough to rush for the safety of government debt.
The benchmark 10-year Treasury note fell 5/32 to 97 30/32 and yielded 3.75 percent, up from 3.74 percent late Wednesday, according to BGCantor Market Data. Prices and yields move in opposite directions.
The 30-year long bond fell 7/32 to 98 5/32 and yielded 4.49 percent, up from 4.47 percent late Wednesday.
The 2-year note, which is the most sensitive to interest rate cuts because of its short duration, fell 6/32 to 99 17/32 and yielded 2.36 percent, up from 2.26 percent late Wednesday.
In later trading, Treasury prices slipped further, pushing yields modestly higher. As of 5:00 p.m. EDT, the 10-year yield was at 3.77 percent, the 30-year yield was at 4.50 percent, and the 2-year yield was at 2.37 percent.
Di Galoma said there was little reaction in the bond market from a number of economic reports that were issued during the session. The latest data showed some contraction in the U.S. economy, and was not unexpected.
The Institute for Supply Management, a trade group of purchasing executives, reported Thursday that its index of manufacturing activity was flat in April.
Meanwhile, the Labor Department said the number of newly laid off workers filing claims for unemployment benefits rose by a greater-than-expected 35,000 last week. Another government report, this time from the Commerce Department, said consumer spending rose in March mostly due to the higher price of commodities like gasoline and food.
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