Concord Condominiums

With little in the way of economic news to guide and the specter of Friday's July Employment report looming large, U.S. Treasury securities traders found no motive to buy on Thursday and only a few reasons to sell. First-time jobless claims edged down just a hair last week, but this provided scant comfort to traders who have been bombarded of late with data showing the economy moving on a steady upward track.

Strong recent economic reports from a number of sectors have erased hope that the Fed will pause its rate-hike program anytime soon. This outlook has provoked aggressive selling of Treasuries, sending prices down and yields, which move in the opposite direction of prices, soaring. While the yield on the 10-year note is at its highest level in four months, the yield on the two-year note is at a four-year high. (Rate increases impact short-term debt more profoundly.) Although yields today ticked up slightly, mortgage lenders who base their rates on these yields were able to hold them fairly steady.

First-time jobless claims for the week ended July 29 fell by 1,000 to 312,000 - less than the expected increase to 315,000. The slight decline in claims was pegged to a decline in auto industry layoffs. The more closely watched four-week average, which smoothes volatility, edged down to 316,750. And continued claims -- people collecting benefits for more than one week - dropped to 2.58 million.

Weakness in Techs, Retail Weigh on Wall Street

Tech stocks, which powered the equity markets to four-year highs in July, are giving it back in August as profit takers move in. There also is a built-in hesitancy to make any big moves prior to an important event, such as tomorrow's employment report. Analysts are expecting 179,000 jobs to be added to non-farm payrolls, which is a healthy increase over the 146,000 jobs added in June. But the 179,000 jobs reflect very accurately the average number of jobs added over the past 18 months. Uncertainty over the report and an increase in oil prices that came close to eliminating Wednesday's decline, also kept the pressure on.

Same-store sales for July were lukewarm, according to most retailers. The heat wave that hung over the country last month negatively affected back-to-school sales. Reported weak sales even took their toll on retailers that don't report sales, such as Dow member Home Depot, which lost more than 2 percent on the woes of others. Outside of retailing, brokerages, homebuilders and airlines also had a tough session.

Only four Dow Jones Industrials closed in positive territory, and none showed a gain near 1 percent. Of the 26 that closed negative, Alcoa, Intel and Home Depot sustained 2-percent-plus losses, while another 10 components lost more than 1 percent.

Chips led the Nasdaq to a 1-percent loss, with all 19 members of the Philadelphia Semiconductor index closing in negative territory. But it was tough times across the board for techs. Microsoft was the only tech bellwether to close above water, ending with a 0.24-percent increase. Intel led in losses with a 2.3-percent decline, but it was followed with five others that lost more than 1 percent each.

At closing:

The Dow 30 Industrial Index fell 87.49 points or 0.82 percent to 10,610.10; the Nasdaq Composite index was down 25.49 points or 1.17 percent at 2,190.92, and the benchmark Standard & Poor's 500 Index lost 9.17 points or 0.74 percent to close at 1,235.86.

The 30-year Treasury bond was down 9/32 in price with the yield rising to 4.52 percent versus 4.50 percent at Wednesday's close.

The 10-year Treasury note was down 4/32 in price with the yield rising to 4.31 percent versus 4.29 percent at Wednesday's close.

The 5-year Treasury note was down 2/32 in price with the yield rising to 4.14 percent versus 4.12 percent at Wednesday's close.

AVERAGE mortgage rates (zero discount points) based on rates collected nationwide were:

The 30-year Conventional Fixed-Rate Mortgage was at 5.673 percent from 5.637 percent at Wednesday's close.

The 15-year Conventional Fixed-Rate Mortgage was at 5.241 percent from 5.224 percent at Wednesday's close.

Coming Up

The July Employment Report, which will be released at 8:30 a.m. EDT on Friday, is the only game on town. The markets will rise or fall depending on how many jobs were added. A stronger-than-expected report will bolster the equity markets and sent Treasuries plummeting as concerns about inflation and aggressive rate hikes erupt. On the other hand, weak numbers will sink stocks and boost Treasuries as inflation and rate-hike worries fade. If the report comes in on target, mortgage rates should remain fairly steady.

Carolyn Siegel

carolyn@interest.com

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