Monday: 12/15/08 5:00 PM EST :
Trade was choppy in the stock market but except for brief gains at the open, the indices spent the day in the red, giving Treasuries added safety allure. Stocks were headed down when bond trading concluded so Treasuries had no time to respond to a late-session bounce in stocks that picked the indices up from their worst levels of the day.
In late trading, the 10-Year Treasury Note was up by 17/32, lowering its yield by 6 basis points to 2.51%; the Dow was down by 65.15 points to 8,564.53; and the Nasdaq was down by 32.38 points to 1,508.34.
As expected, economic news was bearish. The New York Fed index on the region’s manufacturing sector indicated the largest contraction since data began to be compiled in 2001. Industrial production also declined last month with the manufacturing sector leading the way. The IP report also said that the capacity utilization ratio was the second lowest in five-and-a-half years.
Oil futures eased back again despite expectations that the Organization of Petroleum Exporting Countries will decide on Wednesday to sharply cut production limits. Futures had spiked in overnight and early trade but by the close of the regular session on the New York Mercantile Exchange, the price of a barrel of light, sweet crude oil for next month delivery was down by $1.77 at $44.51.
Besides the economic news and uncertainty about what impact the Maddoff investment fraud will have on the market, the financial sector was pressured by an analyst downgrade of JPMorgan Chase. Earnings reports due out this week from Goldman Sachs and Morgan Stanley also weighed on the sector.
The stock indices showed some resilience in relatively light trading volumes. At its low for the day, the Dow was down by 160.65 points or 1.86% but by the end of trading, the loss had been trimmed to 0.75%. The S&P 500 was down by 2.50% at its low but pared the loss to 1.27% by the close. The Nasdaq had been down by 3.20% but finished with a smaller loss of 2.10%.
The gains in the bond market sent the yield of the benchmark 10-Year Note down to its lowest level since daily data from the government was made available in 1960.