Stocks sank as oil prices surged past $44 -- a 21-year record high. The Yukos news -- Russia canceled permission for Yukos to use its accounts -- sparked the rebound in oil, which underpinned the bounce in Treasuries.
Buyers bought Treasuies on fears that higher energy prices will restrain the consumer and slow the economy. That, plus less postive data, could stall the Fed from raising its key interest rate at next Tuesday's policy meeting.
Earlier, Treasuries had eased after the government said Initial Jobless Claims fell a higher-than-anticipated 11,000 to 336,000 in the week ended July 31, vs. expectations of a 5,000 drop to 340,000. Continuing claims fell a modest 35,000 in the week ending July 24 to 2,911,000, only marginally reversing the 157,000 jump to 2,946,000 reported last week.