Wall Street mixed as bond yields rise
EmptyNEW YORK -- Stocks closed mixed in uneven post-holiday trading Thursday as a rebound in bond yields stifled Wall Street's excitement about new buyout activity and strength in the U.S. service sector.
The Institute for Supply Management's index of service sector activity rose to 60.7 in June from 59.7 in May, indicating that non-manufacturing industries saw slightly faster expansion. The figure was better than expected, fueling sentiment that the economy is recovering from a slow first quarter.
However, the data weighed on bond prices, which were already weak after payroll company Automatic Data Processing and consultancy Macroeconomic Advisers said the private sector added 150,000 jobs last month -- a good sign that the Labor Department's report on June nonfarm payrolls Friday will show a solid rise.
As bond prices fell, the 10-year Treasury note's yield shot up to 5.14% Thursday from 5.04% Tuesday, ahead of the July 4th holiday. On Monday, the 10-year yield had slipped below the 5% level for the first time since early June.
Robust data can be double-edged for the stock market; though investors want the economy to strengthen, they remain worried that it will cause interest rates to rise, which can slow down business.
But the 10-year Treasury yield would have to rise significantly to do any real damage to the stock market, said Joe Balestrino, a portfolio manager at Federated Investors Inc. "If things are good, yields are supposed to be a little higher."
Also hurting the Dow Jones industrial average was General Motors Corp., one of the blue-chip index's 30 components. GM was downgraded by a Bear Stearns analyst after the automaker on Tuesday posted a 21.3% drop in June sales compared to last year.
According to preliminary calculations, the Dow fell 11.46, or 0.08%, to 13,565.84.
Broader stock indicators were narrowly mixed. The Standard & Poor's 500 index rose 0.54, or 0.04%, at 1,525.41, while the Nasdaq composite index rose 11.70, or 0.44%, to 2,656.65.