The Free Press, Mankato, MN


June 3, 2013

Stocks are mixed after manufacturing slows down


The yield on the 10-year Treasury note fell as low as 2.09 percent from 2.17 immediately after the report was released at 10:00 a.m. In afternoon trading the yield was 2.12 percent.

The decline in the yield suggests that investors shifted money into U.S. government bonds in anticipation of slightly weaker U.S. economic growth. Investors tend to buy bonds when they want relatively safe assets that are less likely to lose value if the economy slows.

The yield on the 10-year Treasury note, which is used to set interest rates on many kinds of loans including home mortgages, is about half a percentage point higher than it was at the start of the last month.

As Treasury yields fell, rich dividend-paying stocks like power and phone companies moved higher, reversing early losses. Those sectors, so-called defensive stocks, had been investor favorites in the first quarter but declined in May as bond yields rose.

Even though stocks closed higher in May, there are signs that this year's rally may be starting to falter. The Standard & Poor's 500 index closed higher for a seventh straight month, but the index also logged its first back-to-back weekly declines since November. On Friday the Dow plunged 208 points, its worst drop in six weeks.

The Dow is still up 15.6 percent this year, and the S&P 500 is 14.1 percent higher. Stocks have surged as companies reported record earnings and on optimism that the housing market is recovering and hiring is improving.

In commodities trading, oil climbed $1.46, or 1.5 percent, to $93.44 a barrel. Gold rose $18.90, or 1.4 percent, to $1,411.90 an ounce. The dollar fell against the euro and against the Japanese yen. The U.S. currency dropped back below 100 yen for the first time in three weeks.

Among stocks making moves:

Merck led the Dow higher after news crossed that the drugmaker announced encouraging clinical results for a medicine to treat skin cancer. Merck rose $1.91, or 4.1 percent, to $48.61.

Cracker Barrel Old Country Store rose $4.12, or 4.6 percent, or $94.14 after the restaurant operator said its fiscal third-quarter profit rose 30 percent as higher prices on its menus helped increase its sales.

Centene fell 2.5 percent after the Medicaid coverage provider said a Kentucky court ruled that it cannot prematurely end a contract that has generated steep losses. The stock lost $1.25 to $48.25.

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