U.S. Bonds, Dollar Soar as Asian Markets Drop as Asian Markets Drop --- Yield at 5.697%; Dow Industrials Retreat 78.22
The U.S. bond market and the dollar soared amid weak Asian markets and reassuring comments from Federal Reserve Chairman Alan Greenspan, but U.S. stocks declined, in a turbulent day for global investors.</br></br>After initially gaining on Mr. Greenspan's hint that an interest-rate increase isn't imminent, the Dow Jones Industrial Average closed down 78.22, or 0.86%, at 8971.70. Several earnings warnings drove down major technology stocks, and the technology-heavy Nasdaq Composite Index fell 27.51, or 1.53%, to 1773.25. The broad Standard & Poor's 500-stock index fell 6.13, or 0.55%, to 1112.28.</br></br>Several traders said Asian investors were shifting money out of U.S. stocks and into Treasury bonds as Asian stock markets tumbled yesterday. The declines were sparked partly by rumors -- that China might devalue its currency, for example, or that a big Japanese oil company was about to go bankrupt. The continuing flight to quality moved more money into dollarbased financial instruments and pushed the dollar to yet another seven-year high of 141.49 yen, up from 140.22 yen. As if that weren't enough to push up bonds, Mr. Greenspan's comments reassured traders that interest rates aren't likely to rise soon, making existing bonds look more attractive.</br></br>The 30-year bellwether Treasury bond rallied 1 8/32, or $12.50 per $1,000 bond, pulling the yield back to 5.697%, the lowest yield since January.</br></br>"There was a lot of cash on the sidelines waiting to see how this [bond] market was going to break," said Scott Graham, head government bond trader at Prudential Securities. Once the rally started, cash flooded in, he noted.