Meltdown in Treasury Market Sparks Selling Bout in Stocks

The Nasdaq and Russell are clinging to positive territory but the Dow and S&P 500 are in the red.
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As if it wasn't an ugly enough session for Treasuries, it got worse this afternoon, with the government market's downdraft sparking a bout of selling in stocks.

The 30-year Treasury bond was down 1 29/32 to 94 4/32, yielding 5.66%.

The bond was already down sharply on the day following the release of bond-unfriendly economic data before the early afternoon swoon. That swoon came in response to a flood of bond futures selling by a dealer needing to hedge against a huge purchase of bonds -- estimated at between $400 million and $500 million -- according to a market participant.

On the economic front, the

Commerce Department

reported that

gross domestic product

advanced at a 4.5% annual rate in the first quarter, well above economists' forecasts of 3.3% growth. The

National Association of Purchasing Management-Chicago

said its index soared to 63.3 in April from 57.0 in March.

The

Dow Jones Industrial Average

was down 26 to 10,852, after having risen as high as 10.961.71. The

S&P 500

was down 8 to 1335.

The

Nasdaq Composite Index

was up 11 to 2540, but well off its best levels of the day. The Nasdaq Comp's intraday high was 2578.01.

TheStreet.com Internet Sector

index was up 8 to 655, off an intraday peak of nearly 670.

The

Russell 2000

was up 1 to 434.

On the

New York Stock Exchange

, decliners were beating advancers 1,458 to 1,438 on 594 million shares. On the

Nasdaq Stock Market

, winners were beating losers 2,064 to 1,709 on 651 million shares.

On the NYSE, 61 issues had set new 52-week highs while 10 had touched new lows. On the Nasdaq, 72 issues had set new highs while new lows totaled 26.

On the Big Board,

America Online

(AOL)

was most active, with 14 million shares changing hands. It was up 1 5/8 to 143.

On the Nasdaq,

Compuware

(CPWR)

was most active, with 15 million shares changing hands. It was up 2 3/16, or 9%, to 25 7/8. The software company after the close yesterday posted fiscal fourth-quarter earnings of 31 cents a share, beating the

First Call

14-analyst consensus of 29 cents and up from the year-ago 20 cents.

1:18 p.m.: Midday Musings: Stocks Come Off Highs in Sudden Wave of Selling

11:55 a.m.: Stocks Jump as Treasuries Take a Tumble

While bonds were enduring a shellacking, stocks rallied, with technology, Internet and transportation issues among the sectors that are soaring.

The

Dow Jones Industrial Average

was up 63 to 10,941. The blue-chip average rose as much as 10,958.28.

Transportation stocks were rallying. The

Dow Jones Transportation Average

was up 2%, led by

FDX

(FDX) - Get Report

, which was up 4 1/4, or 4%, to 114 1/2.

The technology beefy

Nasdaq Composite Index

was soaring, up 34 to 2563, after falling for three sessions in a row.

TheStreet.com Internet Sector

index was up 14 to 662.

The

S&P 500

was up 7 to 1349. The

Russell 2000

was up 3 to 436.

The 30-year Treasury bond was down 29/32 to 95 5/32, yielding 5.59%. Bonds fell on the strength of two economic reports. The

Commerce Department

reported that

gross domestic product

advanced at a 4.5% annual rate in the first quarter, well above economists' forecasts of 3.3% growth.

Selling increased in the Treasury market after the

National Association of Purchasing Management-Chicago

said its index soared to 63.3 in April from 57.0 in March.

On the

New York Stock Exchange

, advancers were beating decliners 1,619 to 1,103 on 337 million shares. On the

Nasdaq Stock Market

, winners were leading losers 2,038 to 1,368 on 417 million shares.

On the NYSE, 57 issues had set new 52-week highs while 9 had touched new lows. On the Nasdaq, 62 issues had set new highs while new lows totaled 16.

On the Big Board,

America Online

(AOL)

was most active, with 10 million shares changing hands. It was up 2 1/2 to 143 7/8.

Tech Focus

Tech sector barometers were higher. The

Nasdaq 100

was up 2%, while the

Morgan Stanley High-Tech 35

was up also 2%. The

Philadelphia Stock Exchange Semiconductor Index

was up 1%. The

Philadelphia Stock Exchange Computer Box Maker Index

was up 2%.

Nasdaq and tech heavyweights

Cisco

(CSCO) - Get Report

,

Intel

(INTC) - Get Report

,

Microsoft

(MSFT) - Get Report

, and

Dell

(DELL) - Get Report

were all higher.

On the Nasdaq,

Compuware

(CPWR)

was most active, with 9.5 million shares changing hands. It was up 3, or 13%, to 26 3/4. The software company after the bell yesterday posted fiscal fourth-quarter earnings of 31 cents a share, beating the

First Call

14-analyst consensus of 29 cents and up from the year-ago 20 cents.

In the Newsletters

IBM

(IBM) - Get Report

yesterday unveiled a new

Aptiva PC

based on a K6-2 475MHz processor and its first steps toward developing the long-standing consumer brand as an option for the small-business market, according to an article on

Computer Retail Week's

Web site. The article says the new 530 model couples the K6-2 475MHz CPU from

Advanced Micro Devices

(AMD) - Get Report

with an

Iomega

(IOM)

Zip drive.

IBM, a Dow component, was up 4 5/8 to 209 7/16.

Iomega and AMD were up fractionally to 4 15/16 and 16 9/16 respectively.

11:07 a.m.: Tech, Internet Stocks Continue to Rise After Recent Selloff

Technology and Internet stocks were rallying today, in an effort to begin reversing its three-day losing streak, while the benchmark 30-year Treasury bond was getting pounded after the release of a couple of robust economic reports.

Transportation stocks were soaring.

The

Dow Jones Transportation Average

was up 1%.

The

Nasdaq Composite Index

was up 38 to 2566.

TheStreet.com Internet Sector

index was up 16 to 663.

The

Dow Jones Industrial Average

was up 42 to 10,920.

IBM

(IBM) - Get Report

and

3M

(MMM) - Get Report

were powering the Dow. IBM was up 4 7/8 to 209 11/16, while 3M, which beat analysts' earnings estimates today with its first-quarter profit report, was up 4 3/4 to 90 3/8.

Harry Laubscher, market analyst at

Tucker Anthony

, said he expects the Dow to move higher into next week as the market is currently in its strength cycle. His new target on the Dow is 11,020 to 11,050.

The

S&P 500

was up 3 to 1346. The

Russell 2000

was up 3 to 436.

The 30-year Treasury bond was down 29/32 to 95 4/32, yielding 5.59%.

The

Commerce Department

reported that

gross domestic product

advanced at a 4.5% annual rate in the first quarter, well above economists' forecasts of 3.3% growth.

Further weakening bonds came when the

National Association of Purchasing Management-Chicago

said its April index soared to 63.3 from 57.0 in March.

Cyclials were slightly weaker after running up over the last few sessions.

North America's largest farm equipment maker,

Deere

(DE) - Get Report

, was down 5 3/4, or 13%, to 39 3/8, after it warned yesterday it sees second-quarter sales volume falling 20% below year-ago levels and full-year sales falling 18% to 20%.

Laubscher said he has suggested to clients to take money that is in Deere currently and move it into

New Holland

(NH) - Get Report

.

New Holland yesterday posted first-quarter net income that outstripped Wall Street estimates by nearly 40%.

Yesterday,

Dresdner Kleinwort Benson

upgraded the stock to buy from hold, while today,

Salomon Smith Barney

upgraded it to buy from outperform.

Oil stocks are under pressure today after a recent runup. The

Chicago Board Options Exchange Oil Index

was down 1%.

While some Wall Street analysts have been downgrading oil company stocks lately because they think the stocks have run up too far, too fast, Laubscher's got a different view.

"We still think they're attractive," he said of the oil stocks.

On the

New York Stock Exchange

, advancers were beating decliners 1,472 to 1,093 on 280 million shares. On the Nasdaq, winners were beating losers 1,939 to 1,202 on 313 million shares.

On the NYSE, 45 issues had set new 52-week highs while 6 had touched new lows. On the Nasdaq, 55 issues had set new highs while new lows totaled 12.

On the Big Board,

America Online

(AOL)

was most active, with 7 million shares changing hands. It was up 4 3/8 to 145 3/4.

On the Nasdaq,

Compuware

(CPWR)

was most active, with 8 million shares changing hands. It was up 3, or 13%, to 26 13/16.

9:58 a.m.: Tech, Internet Sectors Rise After Recent Selloff

Technology and Internet stocks were sharply higher, rebounding after yesterday's selloff, while the

Commerce Department

reported that

gross domestic product

advanced at a 4.5% annual rate in the first quarter, well above economists' forecasts of 3.3% growth.

The

Dow Jones Industrial Average

was up 30 to 10,909. The

S&P 500

was up 7 to 1350. The

Nasdaq Composite Index

was up 42 to 2571. The

Russell 2000

was up 3 to 436.

TheStreet.com Internet Sector

index was up 15 to 663.

The 30-year Treasury bond was down 19/32 to 95 15/32, yielding 5.57%, in the wake of the GDP report.

Most Up at Open -- NYSE

YPF (YPF) - Get Report, up 7 1/2 to 43 7/16

: Spain's

Repsol

(REP)

has offered to buy the rest of

YPF

, Argentina's largest oil company, for $13.4 billion. In January, Repsol bought a 14.99% stake in YPF for $2 billion.

Most Up at Open -- Nasdaq

CMGI (CMGI) , up 15 5/8 to 255

.

Most Down at Open -- NYSE

Georgia-Pacific (GP) , down 2 7/16 to 43 7/16

.

Most Down at Open -- Nasdaq

Restoration Hardware (RSTO) , down 10 5/8 to 13 3/4

:

NationsBanc Montgomery Securities

downgraded the stock to hold from buy.