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Yields on U.S. Treasury securities, which move in the opposite direction of prices, backed off their highs on Tuesday, but not enough to force mortgage rates down. The rate on a 30-year fixed is at its highest level since May 2004, and it would likely take a weak employment report on Friday to put it in remission. Bond traders today were looking for guidance from Fed officials who spoke to separate groups across the nation. But all suggested that economic growth was steady, although inflation remained under control. This did nothing to dissuade traders from thinking that the Fed would continue with its rate-hike program, nor did it suggest more aggressive moves. This left Treasury yields and mortgage rates, which are based on yields, close to yesterday's levels.

Wall Street bullish on earnings

An upbeat attitude prevailed on Wall Street, based on optimism regarding upcoming quarterly earnings and the release of positive corporate news. Although Caterpillar led the Dow Jones industrials in gains with a 2.5 percent increase, 3M climbed 1.5 percent on the word that it is considering selling its branded drug business to the pharmaceutical sector, although no companies were named as possible buyers. American Express gained a like amount.

In addition, JPMorgan Chase, Honeywell and Citigroup each gained about 1.7 percent, with Citigroup rallying after the Federal Reserve of New York lifted a restriction banning acquisitions that had been in place for a year. Exxon rounded out the list of Dow members with substantial gains -- adding 1.2 percent. There were only a handful of components that landed in negative territory, but GM stood out with its 2.98 percent loss.

The Nasdaq composite hit a five-year high today. With the exception of one minor blip, the tech-heavy index traded in positive territory the entire session. Airlines, computer hardware stocks, utilities and Internet companies led the charge, with Google once again breaching the $400-a-share mark with a 3.8 percent gain.

Dragging on the index were semiconductors and networkers, as evidenced by a 4.2 percent slide in JDS Uniphase shares. But Qualcomm bucked the trend, gaining 1.23 percent on the session.

As of 4 p.m. EDT:

The Dow Jones industrial index closed up 58.91 points (+0.53 percent) to 11, 203.85; the Nasdaq composite gained 8.62 points (+0.37 percent) to 2,345.36, and the Standard & Poor's 500 index rose 8.12 points (+0.63 percent) to 1,305.93.

The 30-year Treasury bond closed down 7/32 in price with the yield rising to 4.91 percent.

The 10-year Treasury note closed down 1/32 in price with the yield rising to 4.87 percent.

The five-year Treasury note closed up 1/32 in price with the yield falling to 4.82 percent.

The two-year Treasury note closed up 1/32 in price with the yield falling to 4.82 percent.

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

The 30-year conventional fixed-rate mortgage crept up to 6.211 percent.

The 15-year conventional fixed-rate mortgage was at 5.86 percent.

Coming up:

The only report scheduled for release Wednesday is the ISM index on March nonmanufacturing conditions, otherwise known as the service sector. Unlike the index on manufacturing, this report has little effect on the financial markets. Analysts are expecting a slight decline to 59.2 versus the 60.1 reading in January.

With little in the way of reports until Friday, when employment data for March will be released, the markets will focus on corporate news and concern themselves with employment report possibilities. Wall Street will also be gearing up for the onset of earnings season, which officially opens next week but won't be in full swing until the week of April 17.

Due to the minor moves in Treasury yields, mortgage rates should hold near present high levels overnight and into Wednesday.

Carolyn Siegel

Carolyn@interest.com

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