NEW YORK — A darkening view of the economy sent bond market interest rates to their lowest level in 14 months and kept many investors out of the stock market.
The yield on the 10-year Treasury note, considered a benchmark because it’s used to set rates on consumer loans including mortgages, fell to 3.03 percent Monday, its lowest point since late April 2009. At that time, the markets were still recovering from the devastation of the financial crisis and collapse in stocks.
Investors felt safer making their bets in the bond market and many avoided any kind of stock trades. All the major stock indexes fell by single digits. The New York Stock Exchange traded less than a billion shares on its selling floor, a number that’s more likely to be seen in August or late December than in June.
Investors are also growing anxious ahead of the release of the government’s June employment report on Friday. The May report was troubling because it showed that private employers are hiring few workers. That hurts the economy, since consumers aren’t likely to spend if they aren’t working or are worried about losing their jobs.
Burt White, chief investment officer at LPL Financial in Boston, said the coming weeks will be important for investors because of the jobs report on Friday and the announcement of earnings for the April-June quarter. White said stronger profits could persuade businesses to start investing more. That, economists hope, will lead to more hiring.
“Businesses have to commit to this recovery,” White said.
The Dow Jones industrial average fell 5.29, or 0.1 percent, to 10,138.52 after being up 58 points.
The broader Standard & Poor’s 500 index fell 2.19, or 0.2 percent, to 1,074.57. The Nasdaq composite index fell 2.83, or 0.1 percent, to 2,220.65.
Commodities, seen as risky investments along with stocks also fell, but their drop was also influenced by a stronger dollar. A rise in the dollar made commodities more expensive for foreign buyers. Crude oil fell 61 cents to $78.25 per barrel on the New York Mercantile Exchange, and gold fell.
Meanwhile, tobacco stocks rose after the Supreme Court said it wouldn’t take up a case between the government and tobacco makers. The decision prevents the government from getting billions of dollars from makers of cigarettes for anti-smoking campaigns. Reynolds American Inc. rose $2.08, or 4.1 percent, to $53.45, and Altria Group Inc., parent of Philip Morris USA, rose 64 cents, or 3.3 percent, to $20.34.
A separate decision from the court signaled that gun control laws in Chicago and a nearby suburb likely would be struck down by a lower court. That gave a boost to shares of gun makers. Smith & Wesson rose 23 cents, or 5.6 percent, to $4.33, while Sturm, Ruger & Co. climbed 33 cents, or 2.2 percent, to $15.39.
Retailers were hurt by the consumer spending report. Macy’s Inc. fell 20 cents, or 1.1 percent, to $18.82, and Amazon.com Inc. fell $3.20, or 2.6 percent, to $117.80. Home Depot Inc. fell 61 cents, or 2 percent, to $29.59.
Eight stocks fell for every seven that rose on the New York Stock Exchange.
The Russell 2000 index of smaller companies fell 3.57, or 0.6 percent, to 641.54.
Britain’s FTSE 100 rose 0.5 percent, Germany’s DAX index gained 1.4 percent, and France’s CAC-40 rose 1.6 percent. Japan’s Nikkei stock average fell 0.5 percent.
Business, Pages 24 on 06/29/2010