Thursday, May 31, 2012
Wall Street closes dire month with a whimper
U.S. stocks fell modestly on Thursday to close out the worst month since September as investor sentiment sank on Europe's deepening credit problems.
The broad S&P 500 index fell 6.3 percent in May, its largest percentage drop since September. The Dow's 6.2 percent drop and Nasdaq's 7.2 percent loss are their largest monthly declines in two years.
Spain was at the center of the latest European developments as markets judged Madrid's government would sooner or later have to ask for outside help for its banks. A report, later denied, of possible plans to assist Spain with its troubled banks helped Wall Street nearly erase losses of 1 percent in the afternoon.
Market participants cited month-end rebalancing as also supporting stocks due to money managers buying more shares to make up for the declining value of equities during May.
However, the continuing worry over Europe and a batch of disappointing U.S. economic figures weighed on the market. Jobless claims rose for the seventh week in eight, putting investors on edge before Friday's U.S. monthly payrolls report.
"Europe is the main issue, no question about it, but you have a supporting cast from the U.S. data," said Paul Zemsky, head of asset allocation at ING Investment Management in New York.
The Dow Jones industrial average dropped 26.41 points, or 0.21 percent, to 12,393.45. The S&P 500 Index fell 2.99 points, or 0.23 percent, to 1,310.33. The Nasdaq Composite lost 10.02 points, or 0.35 percent, to 2,827.34.
Shares of U.S. Steel dropped 5.1 percent to $20.30 and Cliffs Natural Resources fell 6.1 percent to $47.78 as energy and materials company shares led declines on the S&P 500.
Commodity prices fell with the euro at 23-month lows against the U.S. dollar. The greenback weakened sharply versus the yen, a sign that investors were moving money into perceived safe havens.
Private payroll growth accelerated only slightly last month and claims for jobless benefits rose last week, suggesting the labor market recovery was stalling.
A disappointing number in Friday's report would further damp market sentiment, but it could also bring back talk of further stimulus by the U.S. Federal Reserve
Read Full Article .. Here
