Marlborough Condominiums

U.S. Treasury securities were in for a bumpy ride on Thursday. A big decline in first-time jobless claims spawned visions of escalating wages and prices, which led to selling early in the session. However, a drop in oil prices reversed that course - for a while. But a weak auction of five-year notes brought the sellers back. At the session's end, Treasury yields, which move in the opposite direction of prices, had ticked up. Mortgage rates, however, which are based on Treasury yields, strayed very little from Wednesday's levels.

First-time unemployment claims reversed course for the week ended Feb. 17. Claims fell by 20,000 to 278,000 after rising by 19,000 the previous week. Analysts were expecting an increase of 22,000. Claims have held below 300,000 for six straight weeks. The four-week average, which smoothes volatility, fell to 281,750 - its lowest level since 2001. But continued claims - from people who have collected benefits for more than one week - rose to 2.5 million.

Higher inventories on oil, gas and heating oil sent already-declining oil prices down further. This is the second straight day of declines, and it bolstered the financial markets. Oil closed at $60.54 a barrel.

Lackluster demand for five-year notes, especially from foreign central banks and big investors, spurred renewed selling of U.S. Treasuries. Indirect bidders accounted for only 22 percent of sales, which is far below the average. The poor response worried traders who rely on foreign investors to keep the bond markets healthy.

Stocks U-turn, close down

The Dow Jones industrials gave back most of Wednesday's gains, while the Nasdaq composite and Standard & Poor's 500 ended up with smaller losses. The Nasdaq was trading positive a good part of the session, but couldn't hold on in the closing hour.

The Dow Jones industrials posted a substantial loss brought about by a number of small losses rather than a few big ones. Only four components closed in positive territory, and none gained as much as 1 percent. Of the 26 blue chips that closed down, GM led with a 2.8-percent decline, followed by Hewlett-Packard, which shed 1.8 percent. Another five Dow members slid slightly more than 1 percent, but other losses were modest.

Semiconductors have been leading the charge for the Nasdaq lately, but today they pulled back. Chip giant Intel, however, closed in positive territory after a devastating downgrade yesterday. Google ended with a gain after weathering big losses last week. Apple also grabbed headlines by announcing that its billionth song was downloaded today via iTunes. On the other hand, Dell continued to slide, falling 2.3 percent, while Qualcomm shed 1.8 percent decline.

As of 4 p.m. EST:

The Dow Jones industrial index closed down 67.95 points (-0.61 percent) to 11,069.22; the Nasdaq composite lost 3.85 points (-0.17 percent) to 2,279.32, and the Standard & Poor's 500 index fell 4.88 points (-0.38 percent) to 1,287.79.

The 30-year Treasury bond closed down 15/32 in price with the yield rising to 4.50 percent, from 4.48 percent on Wednesday.

The 10-year Treasury note closed down 9/32 in price with the yield rising to 4.56 percent, from 4.53 percent on Wednesday.

The five-year Treasury note closed down 7/32 price with the yield rising to 4.61 percent, from 4.56 percent on Wednesday.

The two-year Treasury note closed down 2/32 in price with the yield rising to 4.71 percent, from 4.67 percent on Wednesday.

At 4 p.m. EST, average mortgage rates (zero discount points) based on rates collected nationwide were:

The 30-year conventional fixed-rate mortgage held at 6.001 percent, the same as on Wednesday.

The 15-year conventional fixed-rate mortgage was at 5.595 percent, up from 5.591 percent on Wednesday.

Coming up:

The week ends with a report on durable goods orders for January. This indicator carries some weight, as orders can influence the direction of future manufacturing. Analysts are forecasting a 4-percent decline in orders for durables - big-ticket items meant to last more than three years. This is a sharp drop from the 1.3-percent increase posted in December. But this report is extremely volatile due to orders for aircraft and defense spending.

Although Treasury yields edged up on Thursday, they are not substantially higher than they have been over the past several days. The relative steadiness in yields should allow mortgage lenders, who base their rates on yields, to hold rates steady.

Carolyn Siegel

Carolyn@interest.com

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