Friday SUMMARY: May 28
Spain’s approval of new austerity measures spurred the markets higher early this morning, and then Fitch Ratings pointed to “Spain’s unemployment rate, the legacy of its construction boom, and its high level of indebtedness”, and also cited “the risk that economic growth will fall short of the government’s projections.” This negative message effectively negated any newfound confidence in the euro zone’s economy and stocks finished the month of May with a thud. Domestically, disappointing reports on consumer spending and Chicago-area business activity only served to add to the bleak mood as the Dow Jones Industrial Average tumbled 7.9% for the month, marking its worst May performance since 1940.
The Dow Jones Industrial Average (DJIA – 10,136.63) closed off 122.4 points, or 1.2% and lost just 0.6% for the week, but couldn’t erase its monthly loss of nearly 8%. Following weeks of turbulent trading, the Dow suffered a monthly finish below its 10-month moving average for the first time since June 2009.
The S&P 500 Index (SPX – 1,089.41) closed off 13.7 points, or 1.2%. The SPX gained 0.2% for the week, but gave up 8.2% for the month. Finally, the Nasdaq Composite (COMP – 2,257.04) outperformed both its peers. The tech-rich index shed 20.6 points today, or 0.9%, but it’s still positioned above both its 10-day and 10-month moving averages. The COMP wrapped up the week on a gain of 1.3%, but swallowed a monthly drop of 8.3%.
Crude futures fell in sympathy with stocks today as July-dated crude wrapped up the session with a relatively modest loss of 58 cents, or 0.8%, at $73.97 per barrel. The front-month contract added 5.6% for the week, but persistent macroeconomic concerns helped push black gold to its steepest monthly drop since December 2008, ending the month of May on a deficit of 14.1%.
Gold was able to benefit from its reputation as a safe haven from volatility in the equities market as Gold for August delivery added 60 cents, or 0.1%, to finish at $1,215 per ounce. For the week, gold futures added 3.3%; for the month, gold gained 3%.
