Bonds Prices Boosted by Stock Market Decline, Perceptions That Economy Is Growing Weaker
NEW YORK -- The bond market, which sometimes thrives on bad news, cheered yesterday's stock market sell-off and perceptions that the economy is growing weaker.</br></br>Early in the day, bonds rose modestly on economists' forecasts that this week's slate of economic data will portray an economy headed for trouble. Such news is good for bonds because economic weakness sometimes causes the Federal Reserve to lower interest rates in an effort to stimulate the economy and stave off a recession.</br></br>For example, today the Department of Commerce is scheduled to release the September durable goods report. The consensus forecast of 14 economists surveyed by Dow Jones Capital Markets Report is for a 1.2% drop in September orders. That would follow a 3.9% advance in August.</br></br>Bonds received a bigger boost later in the day when stock prices moved broadly lower. The Dow Jones Industrial Average fell 26.23 points to 2662.91.</br></br>"Bond investors have been watching stocks closely," said Joel Marver, chief fixed-income analyst at Technical Data Global Markets Group. "When you get a big sell-off in equities, money starts to shift into bonds," which are considered safer, he said.