Dow closes up 39, but stocks end week lower

Updated: 6:40 p.m. ET

Stocks ended the day modestly higher for the third straight day in a rally fueled by a lower dollar and gains in materials and financial stocks.

But the rally wasn't enough to push the market into the black for the week. And with one trading day to go in May, the market is looking at its first monthly loss since November and worst loss since August.

You could see the strength of financials in Bank of America (BAC), which closed up 2% to $11.69 and was the top stock in the Dow Jones Industrial Average ($INDU). Fertilizer maker CF Industries (CF) rose 3.3% to $155.19. Freeport-McMoRan Copper & Gold (FCX) was up 2.7% to $51.73. Anadarko Petroleum (APC) was up 1% to $78.66.

The market has had to contend in May with evidence of a softening economy as well as a break in many commodity prices at the beginning of the month. Gold has lost 1.3% this month. Silver has tumbled 22.1%. Crude oil has dropped 11.7%, and there has been relief at the gas pump. 
 

Markets are closed Monday for Memorial Day.

The Dow closed up 39 points to 12,442. TheStandard & Poor's 500 Index ($INX) added 5 points to 1,331, and the Nasdaq Composite Index ($COMPX) rose 14 points to 2,797.

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The Dow fell 0.6% for the week, with the S&P 500 and the Nasdaq off 0.2% each. For the month, the Dow is looking at a 2.9% decline, with the S&P 500 down 2.4% and the Nasdaq down 2.7%. But the blue chips are up 7.5% for the year. The S&P 500 is up 5.8%, while the Nasdaq is up 5.4%.

Bank stocks really did have a good day

Not only did Bank of America move up 2%, but Goldman Sachs (GS) was up 2% to $138.66. Capital One (COF) added 2.2% to $54.04. American Express (AXP) added 0.9% to $51.13, and JPMorgan Chase (JPM) rose 0.8% to $42.79.

One reason for the gains was reports that global capital requirements (so-called Basel III standards) may not be as tough as bankers feared. Consumer confidence was a little better.

And the stocks have become cheap. The Standard & Poor's Banking Index ($BIX) hit a 5-month low on Tuesday and bounced higher.

Dollar's fall helps commodities
The dollar was lower against the euro, the Japanese yen and the British pound. The U.S. Dollar Index, which measures the greenback against a basket of currencies, was down 0.8% to 75.04.

Gold settled up $13.50 to $1,536.30 an ounce and ended with a 0.9% gain for the week. Silver was up 36.5 cents to $37.70 an ounce and finished the week up 7.9%. Copper added 7.5 cents to $4.186 a pound, ending the week up 1.8%.

Crude oil rose 36 cents to $100.59 a barrel just before the New York settlement and ended up 0.5% for the week.

Motorists heading out of town for the Memorial Day weekend will get a bit of a break. The national average for regular unleaded gas was $3.809 a gallon, AAA's Daily Fuel Gauge Report shows. That's down 4.4% from a peak of $3.985 a gallon on May 5. But gasoline is up 38% from a year ago.

Interest rates were off slightly, with the 10-year Treasury yield rising to 3.063% from 3.061% on Thursday.

Pending home sales dive; consumers feel fetter
Today's economic news was mixed.

The National Association of Realtors said pending home sales plunged 11.6% in April, after gaining 3.5% in March. The market had only expected a decline of 1.4% for April. The trade group blamed the decline on higher gasoline prices and jobless claims and terrible weather that kept many would-be homebuyers at home.

The University of Michigan upwardly revised its May consumer sentiment index reading to 74.3, thanks in part to falling gasoline prices. Economists hadn’t expected any revisions to the prior May index reading of 72.4, according to Briefing.com. In April, the consumer sentiment index came in at 69.8.

Meanwhile, the Commerce Department said personal income rose 0.4% in April, meeting expectations, after similar growth in March. Personal spending rose 0.4% in April, coming in slightly below expectations for a 0.5% uptick, after rising 0.5% in March.

Fitch Ratings revised its outlook on Japan to negative from stable, citing the March 11 earthquake and tsunami, among other reasons. The ratings agency said Japan's "sovereign credit-worthiness is under negative pressure from rising government indebtedness."

Leaders and laggards
Online professional network company LinkedIn (LNKD) saw its stock advance 2.3% to $88.32. Options activity in the stock, which had its IPO last week, started today.

Advanced Analogic Technologies (AATI), up 54.6% to $6.03, tops in the Russell 2000 Index ($RUT.X). The maker of power-management chips for mobile phones and computers agreed to be bought by Skyworks Solutions (SWKS) for $6.13 a share. Skyworks declined 5.7% to $25.50.

Broadcom (BRCM), up 5.4% to $36.52, tops among S&P 500 stocks. The maker of semiconductors for wireless headsets and television set-top boxes was added to FBR Capital Markets’ Top Picks list. Analyst Craig Berger said in a note that the stock presented “an attractive and rare value opportunity.”

Dresser-Rand Group (DRC), up 5.4% to $51.67. The maker of equipment for the oil and natural-gas industries will replace AMB Property (AMB) in the S&P 400 index ($MID.X).

Marvell Technology Group (MRVL), up 11.1% to $16.17. The maker of the processor that runs BlackBerry smartphones forecast second-quarter profit of 35 cents to 39 cents a share, excluding one-time charges. The Street estimate has been 33 cents.

McClatchy (MNI), up 6.9% to $2.95. The publisher of the Miami Herald sold a 14-acre parcel of Miami land for $236 million to Genting Malaysia BHD. The company started to sell the parcel, which includes the newspaper's building, six years ago. The deal allows the Herald to remain in the building rent-free for two years as it searches for a new home.

Medco Health Solutions (MHS), down 9% to $58.66. The largest U.S. pharmacy benefits manager will lose a $3 billion Blue Cross Blue Shield Association contract to CVS Caremark (CVS) in 2012. The contract represents almost 5% of its revenue. CVS Caremark rose 2.1% to $38.94.30.

Mentor Graphics (MENT), down 8.1% to $13.46. The software maker forecast second-quarter earnings of about 5 cents a share, excluding some items, missing the consensus estimate of 17 cents.

OmniVision Technology (OVTI), down 8.9% to $33.18. The maker of image sensors for camera phones said first-quarter earnings may be as low as 64 cents a share. The Street had been looking for 69 cents. Revenue also may fall short of estimates.

Weyerhaeuser (WY), down 5.4% to $20.87. The second-largest owner of U.S. timberland was cut to "sell" from "hold" by Deutsche Bank, which said the outlook is "deteriorating" in most of the company’s businesses.