Snow slows retail, but financials buoyant
December 27th, 2010
06:56 PM ET

Snow slows retail, but financials buoyant

A look at highlights from the day's business news headlines:

Stocks withstand China, blizzard

U.S. stocks ended Monday mixed as investors digested a surprise interest rate hike by the Bank of China and a blizzard put a damper on post-holiday retail sales.

The Dow Jones industrial average fell 18 points, or 0.2%, with nearly two-thirds of the 30 blue-chip index issues in the red. Kraft, Procter & Gamble and Microsoft were the biggest decliners of the day, though none fell by more than 1%.

Volume was low Monday and is expected to stay lighter than normal for a holiday week, because of a major snowstorm that blew through the Northeast late Sunday and into Monday. Retailers were taking a hit as the storm was keeping shoppers at bay, but financials were showing some resilience.

After spending most of the session in the red, the S&P 500 and the Nasdaq managed to turn higher, but the gains were muted. The S&P 500 rose less than 1 point, or 0.1% and the tech-heavy Nasdaq rose nearly 2 points, or 0.1%.

"We're seeing a slight impact on the market since China raised its interest rate on Christmas Day," said Richard Campagna, chief investment officer at 300 North Capital.

Despite a downbeat start to the last week of 2010, Campagna expects markets will turn around to end the week higher with a so-called Santa Claus rally.

Stocks are up more than 5% for the month of December, and are poised to end the year with double-digit gains.

Treasury sell-off stalls

Treasury prices took a post-holiday respite from their month-long sell-off on Monday.

Investors sent bond prices higher, following a surprise interest rate hike in China and ahead of a $99 billion auction of long-term government notes scheduled for this week.

The yield on the benchmark 10-year note fell to 3.35%. The 30-year bond yield sank to 4.42%.

Meanwhile, the yield on the 2-year note was even at 0.61%, and the 5-year note also held steady at to 2.05%. Treasury prices and yields move in opposite directions.

The Treasury Department issued a new slate of two-year notes Monday, worth a total of $35 billion. It was surprisingly successful, with about three-times as much investment interest as there were bonds to sell. That could bode well for bonds this week, analysts say.

"Today's two-year auction will set the tone for the first two days this week, depending on the size of the tail," said Jim Vogel of FTN Financial, in an analyst note. "End-of-December Treasury sales are dicey to begin with and each bidder will be watching over their shoulder for bids wanted on any price strength."

– reporters Hibah Yousuf and David Goldman contributed to this report.

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