Treasuries fall as Fed signals continuation of low interest rates, stocks rally

(April 12th, 2012) Treasuries dropped for the second day as investors embraced news of lower borrowing costs in peripheral European states, and the S&P 500 index posted its biggest two-day gain in 2012.

Yields on 30-year bonds rose 0.02 percentage points to 3.22 percent after the US sold $13 billion in 30-year securities. Yield on benchmark 10-year notes climbed 2 basis points to 2.06 percent.  The iShares Barclays 20 Year Treasury Bond ETF (TLT) slipped 0.48 points, or 0.42 percent, for the day, while the Vanguard Total Bond Market ETF (BND) climbed 0.01 points, or 0.01 percent over Wednesday’s close.

US stocks rallied higher Thursday, posting its biggest two-day gain in 2012 as the Federal Reserve signaled continuation of record low rates. Sentiments were also buoyed by the assumption that China’s economy is headed for a soft landing and US first quarter earnings would be better than expected.
The Dow Jones Industrial Average (DJIA) surged 181.1 points, or 1.4 percent, to 12,986.5, making it the second best point-gain of the year. 26 of the 30-component Dow advanced Thursday with personal computer maker Hewlett Packard Co. (HPQ) leading the blue-chips gains with a 7.2 percent jump after research by IDC and Gartner Inc found that HP topped the chart in terms of PC shipments, outpacing even Apple, accounting for 17 percent of global supplies in the first quarter. AT&T (T) jumping 1.3 percent JPMorgan upgraded its outlook for the phone-maker. Wholesale pharmaceutical company McKesson (MCK) rose after US Department of Veteran Affairs awarded it $4 billion-a-year contract to supply medications at VA facilities.

The S&P 500 Index (SPX) rose 18.86 points, or 1.4 percent, to 1387.57 with the natural resources sector advancing the most. Shares of US Steel Corp (X) were among those rallied, adding 7.5 percent on the day. The NASDAQ Composite (COMP) jumped 39.09 points, or 1.3 percent, to close at 3055.55. Advancers outpaced decliners by five-to-one on the NYSE.

Oil prices for May delivery rose 94 cents to end at $103.64 a barrel.

Gold futures for April delivery climbed $20.50 to settle at $1,679.50 an ounce.