Treasuries hit 7-month high; US stocks end lower as Greece worry weighs

(Bond Market Recap for May 16th, 2012) Treasuries rose, pushing the yield on benchmark 10-year notes to a seven-month low as uncertainty over the situation in Greece continued and the US Fed said further economic stimulus may be required to boost growth.

Treasury Bonds retreated early in the trading session,  however demand picked up after minutes from the FOMC committee showed several US central bank officials talking of additional action which may be needed to keep recovery on track due to increased risk. The benchmark 10-year yield dropped one basis point to close at 1.76 percent after touching 1.75 percent, the lowest since Oct 4. Yields on 10-year Treasuries had earlier jumped to 1.82 percent after reports showed April industrial production rose more than estimated and US builders  broke ground for more homes.

Bond Funds were up as well, with the iShares Barclays 20 Year Treasury Bond ETF (TLT) adding 35 cents, or 0.29 percent, to end at $122.01, while the Vanguard Total Bond Market ETF (BND) shed 5 cents, or 0.06 percent to settle at $84.07.

US stocks closed lower Wednesday for the fourth day in row despite starting off strongly as concerns over Greece weighed down robust US economic data on factory output and housing. The Dow Jones Industrial Average (DJIA) sank 33.45 points, or 0.3 percent, to 12,598.33, its lowest close since Jan 18 despite surging 90 points during the day’s trade. Retailer JC Penny (JCP) slumped after the company announced a bigger than expected loss and discontinued its dividend for the year. Office supplier Staples (SPLS) tanked after sales for the quarter dropped by 1 percent though profits met expectations.

The S&P 500 Index (SPX) shed 5.86 points, or 0.4 percent, to 1324.80 with the financials faring the worst and consumer-staples performing the best among its 10 business groups.  The tech-heavy NASDAQ Composite (COMP) slipped 19.72 points, or 0.7 percent, to close at 2874.04.  For every stock that advanced, more than two declined on the NYSE.

Crude oil futures for June delivery fell $1.17 to settle at $106.16 a barrel.

Gold futures for June delivery dropped $20.50 to settle at $1,536.60 an ounce.