Flight to safety: 10-year yield at record low

@CNNMoneyInvest May 17, 2012: 5:27 PM ET
10-year Treasury yield

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NEW YORK (CNNMoney) -- Investors fled stocks and made a rush toward the safety of U.S. Treasuries Thursday, sending 10-year yield to a record low close, as worries about Greece's future in the eurozone continued to escalate.

The Dow Jones industrial average (INDU) dropped 156 points, or 1.2%, and the S&P 500 (SPX) lost 20 points, or 1.5%. The day's retreat marked the fifth day of declines for the Dow and S&P 500.

The Nasdaq (COMP) closed in the red for a fourth consecutive session, shedding 60 points, or 2.2%.

All three indexes ended at the lowest levels since January.

Concerns about Greece's place in the 17-nation eurozone continued to build, pushing investors toward U.S. government debt, which is perceived as a safe haven investment. The yield on the 10-year Treasury was 1.706% Thursday, the lowest closing level on record.

European leaders voiced support Wednesday for keeping Greece in the body, but said the debt-ridden country must stick with unpopular austerity measures if it wants to continue receiving help.

Greek voters rebelled against those measures in the May 6 elections, denying the ruling coalition -- which had agreed to the bailout terms -- the votes needed to form a new government. Greek voters will go to the polls again on June 17.

Though the ability to form a governing coalition remains uncertain, the main fear is that an anti-austerity ruling party could cause the bailout deal to unravel, leading to a Greek default and an exit from the euro.

Citing the "heightened risk that Greece may not be able to sustain its membership of Economic and Monetary Union," Fitch Ratings downgraded Greece's credit rating by one notch to CCC.

Adding to those concerns, the European Central Bank has suspended its lending to some Greek banks that need to sufficiently boost their capital.

Meanwhile, a growing number of depositors are withdrawing their money amid worries that their savings could be converted to a devalued currency if Greece drops the euro.

The rapid withdrawals add pressure on the Greek banking system, which is the "primary trigger for some from of the eurozone break-up," said Jonathan Loynes, chief European economist at Capital Economics.

Investors remain worried about what a Greek exit from the eurozone would mean for global financial systems.

"Not surprisingly, concerns are growing that bank runs could soon become a regular feature in other troubled countries in the region deemed at risk of following Greece's lead," said Loynes.

Adding to Europe's troubles, Spain got yet another slap in the face Thursday, when Moody's Investors Service downgraded sixteen Spanish banks including giants Banco Santander and BBVA, saying the Spanish government's "ability to provide support to the banks has reduced." Earlier the ratings agency downgraded four of the country's regional governments.

Stocks finished in the red Wednesday, as positive economic data in the U.S. failed to counter increasing pessimism over Greece's fiscal woes.

Companies: Facebook (FB)priced its initial public offering at $38 a share after the closing bell Thursday. Shares of Facebook will begin trading Friday on the Nasdaq.

The offering raised $16 billion, making it the most valuable tech IPO in history.

Retail giants Wal-Mart (WMT, Fortune 500) and Sears Holdings (SHLD, Fortune 500) were among the biggest gainers Thursday. Wal-Mart, the nation's largest retailer, posted stronger-than-expected quarterly earnings and sales.

Rival Sears also reported a profit, even as sales declined, thanks to a boost from selling real estate assets. The retailer also announced it was looking at a partial spin-off of its Canadian operations.

Shares of JPMorgan Chase (JPM, Fortune 500) fell Thursday, a day after the director of the FBI confirmed his agency had launched an initial investigation into a $2 billion trading loss suffered by the bank.

Economy: Initial jobless claims were unchanged in the week ended May 12 from the revised figure of 370,000. The number came in weaker than expected.

Foreclosures fell for the third straight month in April, reaching the lowest level since 2007, according to tracking service RealtyTrac.

A Philadelphia Fed report showed that regional manufacturing unexpectedly plunged in May for the first time in eight months. The Philly Fed index fell to -5.8 from 8.5 in April. Economists were expecting the index to increase to 8.8. Any reading below zero indicates weakness.

The index of leading indicators, which gauges the economy's performance over the next three to six months, was also discouraging. The index fell 0.1% in April, disappointing economists who expected it to rise 0.2%.

World markets: European stocks slid on Thursday. Britain's FTSE 100 (UKX) and the DAX (DAX) in Germany slipped 1.2% and France's CAC 40 (CAC40) fell 1.1%.

Most Asian markets ended higher following a report that showed the Japanese economy grew 1% in the first quarter, which was much better than forecasts. Tokyo's Nikkei (N225) gained 0.9% on the news, while the Shanghai Composite (SHCOMP) rose 1.4%. Hong Kong's Hang Seng (HSI) slipped 0.3%.

Currencies and commodities: The dollar fell against the Japanese yen, but edged higher against the euro and British pound.

Oil for June delivery edged down 25 cents to settle at $92.56 a barrel.

Gold futures for June delivery rose $38.30 to settle at $1,5574.90 an ounce.  To top of page

Index Last Change % Change
Dow 32,627.97 -234.33 -0.71%
Nasdaq 13,215.24 99.07 0.76%
S&P 500 3,913.10 -2.36 -0.06%
Treasuries 1.73 0.00 0.12%
Data as of 6:29am ET
Company Price Change % Change
Ford Motor Co 8.29 0.05 0.61%
Advanced Micro Devic... 54.59 0.70 1.30%
Cisco Systems Inc 47.49 -2.44 -4.89%
General Electric Co 13.00 -0.16 -1.22%
Kraft Heinz Co 27.84 -2.20 -7.32%
Data as of 2:44pm ET
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.80%3.88%
15 yr fixed3.20%3.23%
5/1 ARM3.84%3.88%
30 yr refi3.82%3.93%
15 yr refi3.20%3.23%
Rate data provided
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