Daily Mortgage Update

Mortgage rates remain at higher levels

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Wall Street tries for big gains but fails

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The three major equity indexes got off to a good start Monday, bolstered by merger news. The biggest move was Capital One Financial Corp.'s acquisition of North Fork Bancorp, which will add Capital One to the list of 10 biggest financial institutions in the country. North Fork's stock jumped 15 percent on the news. Newspaper publisher McClatchy Co. is buying the larger Knight-Ridder Inc. chain, while Watson Pharmaceuticals Inc. is purchasing Andrx Corp., which rose 9.9 percent. There also are a number of offers on the table involving a host of other companies.

The Dow Jones industrials traded in positive territory for a good part of the session, but lost traction in the afternoon and couldn't recover. They closed flat on the day. The components were split almost evenly between winners and losers, with the 15 posting gains led by DuPont and Disney, which each added 1.5 percent. Merck was a close second, rising 1.3 percent, while other gains were well below the 1-percent mark. GM and Honeywell were the only two to lose more than 1 percent, shedding 1.3 percent and 1.1 percent, respectively.

Another increase in oil prices put pressure on the equity markets, and continuing increases in interest rates also took their toll. But home builders as a whole bucked the odds and had a winning day, as did networkers, energy and oil services. Chips and airlines were down, and a downgrade on Applied Micro Devices sent its shares tumbling 7.2 percent. Apple, however, was upgraded and closed with a 4-percent gain.

As of 4 p.m. EST:

The Dow Jones industrial index closed down 0.32 points (-0.00 percent) to 11,076.02; the Nasdaq composite gained 4.99 points (+0.22 percent) to 2,2672.03, and the Standard & Poor's 500 index gained 2.55 points (+0.20 percent) to 1,284.13.

The 30-year Treasury bond closed down 8/32 in price with the yield rising to 4.76 percent, from 4.74 percent on Friday.

The 10-year Treasury note closed down 4/32 in price with the yield rising to 4.77 percent, from 4.75 percent on Friday.

The five-year Treasury note traded flat in price with the yield holding at 4.77 percent.

The two-year Treasury note traded flat in price with the yield falling to 4.72 percent, from 4.74 percent on Friday.

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

The 30-year conventional fixed-rate mortgage was at 6.153 percent, up from 6.109 percent on Friday.

The 15-year conventional fixed-rate mortgage held at 5.751 percent.

Coming up:

Advance retail sales for February is the headline economic report for Tuesday. Sales are expected to fall to a minus 0.8 percent, which is a huge decline from the 2.3 percent gain in January. Strong auto sales in the first of the year were partially responsible for the big numbers. Weak retail sales would support Treasuries, as consumer spending is responsible for about two-thirds of gross domestic product. A drop-off in spending could stifle economic growth.

Business inventories for January also are due, and they are expected to climb 0.3 percent. This would be a sharp drop from the 0.7 percent inventory increase reported in December. A decline in inventories sometimes leads to increased manufacturing in order to restock empty shelves.

Overnight and into Tuesday mortgage rates should hold near recent levels, and if the retail report tomorrow suggests weakness in the retail sector, rates should remain steady.

Carolyn Siegel

Carolyn@interest.com