Dow suffers worst monthly loss in 2 years

The blue chips and S&P 500 rally from early losses but end down slightly on European worries. US jobless claims rise, and worries build about Friday's jobs report. Oil falls below $87. Facebook rallies after falling under $27.

By Charley Blaine May 31, 2012 12:54PM
Charley BlaineUpdated: 6:51 p.m. ET

The good news for stocks on the last day of May was that things might have been worse.

The bad news is that, while the Dow Jones industrials ($INDU) recovered most of a 103-point loss early in the day, the blue chips still ended the day lower. And they suffered their worst monthly percentage loss since May 2010.

The issues for many investors were concern that the U.S. economy may be slowing and fears that Europe's financial system is teetering badly. Losses were trimmed substantially, however, on reports that the International Monetary Fund was starting to look at contingency plans to help Spain's banks if the country can't fund a bailout itself.

Crude oil (-CL) dropped below $87 a barrel but moved up after the IMF report.  Gold (-GC) also moved lower.

The Dow closed down 26 points to 12,393. The Standard & Poor's 500 Index ($INX) slipped 3 points to 1,310, and the Nasdaq Composite Index ($COMPX) dropped 10 points to 2,827. The index had been off as many as 35 points.

Article continues below.
The Nasdaq-100 Index ($NDX) was off 13 points to 2,525. Apple (AAPL), which represents about 12% of the market capitalization of the stocks in the Nasdaq-100, was down $1.44 to $577.73 after falling to as low as $571.46.

The IMF report went through through some refining. According to CNBC's Steve Liesman, the IMF contingency planning is going on internally and has not yet evolved into a formal proposal.

The IMF doesn't want to extend aid to Europe until it is convinced Europe has run out of money.

Some good news, but Friday could be volatile
If you wanted some good news from today's market, it was this: The S&P 500 briefly dropped below 1,300, a key support level, and immediately bounced higher. The index has survived multiple attempts to get it to close below 1,300 in the last nine days.

But Friday is shaping up as a difficult day, starting with the release of the Labor Department's May jobs report at 8:30 a.m. ET. Many analysts had expected the unemployment rate to hold at 8.1% but nonfarm payrolls to grow by 150,000. Estimates have been cut in the last day or so. Nomura Securities is now projecting only 95,000.

Also coming on Friday: the Institute for Supply Management's manufacturing report for May and auto sales for May. 

A crummy May guts the year's early gains
The Dow ended May down 6.3%, with the S&P 500 down 6.6% and the Nasdaq off 7.9%. The percentage losses for the Dow and the Nasdaq were their worst since May 2010. The S&P 500's decline was its worst since September.

The Dow was up just five times in the month, the fewest days since 1969. There were no multi-day winning streaks. The last time that happened was in May 2010 when the Dow fell 7.9%.

The May slump has cut the market's gains for the year by more than half. The Dow is up 1.4% on the year. It had been up as much as 8.7% on May 1. The S&P 500 has seen its gain for the year shrink from 12.8% on April 2 to 4.2%. The Nasdaq is up 8.5%; it had been up as much as 19.8% on April 2.

So, the question is what happens next. The answer turns on what happens in Europe and, to a lesser extent, China.

Ireland voted on whether to accept austerity provisions for its budget today; results are due Friday. The proposition is expected to win. But it's not clear if Greek elections, set for June 17, will result in support for continued austerity measures.  The country is already in a deep recession.

At the same time, Spain is suffering a banking crisis after a real-estate bubble that was maybe more pronounced than the U.S. bubble that peaked in 2006. Its third-largest bank needs more than $24 billion in assistance to stay afloat.

Most of Europe is in a slowdown -- Germany is an exception -- and that's affecting results and expectations of many of the largest U.S. multinational companies. IBM (IBM) was off 7% for the month. Boeing (BA) fell 9.4%.

Freeport-McMoRan (FCX) fell 16.3% this month because much of its copper production from a giant mine in Indonesia is sold to Chinese customers.

Facebook rebounds after falling under $27; Joy Global is hit
Facebook (FB) briefly dropped to as low as $26.88 but recovered to $29.60, up $1.41. That's still 22% below $38, where its initial public offering was priced on May 17.

Mining-equipment maker Joy Global (JOY) was down $3.01 to $55.86 after cutting earnings and revenue forecasts. Much of its revenue comes from outside the United States.

Tivo
(TIVO) was off 42 cents to $8.54 as the digital video-recorder pioneer reported a loss.

Shares of Talbots (TLB) almost doubled to $2.44 as the women's apparel retailer agreed to be bought by Sycamore Partners for $369 million including debt.

Sirius XM Radio (SIRI) was unchanged at $1.89 but was up slightly after hours. But change may well be coming. John Malone's Liberty Media (LMCA) said it wants to take control of the company. It now owns 46% of the shares and told the Federal Communications Commission it wants to buy more. The ultimate goal is not simply to own Sirius. It may well be bring Sirius directly into Liberty Media and then spin the company off to Liberty shareholders. Liberty Media bailed out Sirius in 2009, it obtained its huge stake in the satellite radio company.

Energy prices -- New York close



Thur.

Wed.

Month chg.

YTD chg.
Crude oil (-CL)

$86.53

$87.82

-17.49%

-12.45%
(per barrel)











Heating oil (-HO)

$2.7032

$2.7438

-15.11%

-7.24%
(per gallon)











Natural gas (-NG)

$2.422

$2.4180

6.00%

-18.97%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.7227

$2.7739

-12.86%

2.46%
(per gallon)











Brent crude 

$101.87

$103.47

-14.78%

-5.13%
(per barrel)











Retail gasoline

$3.6200

$3.6260

-5.14%

10.50%
(per gallon; AAA)












Crude oil slumps, but gold slips
Crude oil in New York settled down $1.29 to $86.53 a barrel. Brent crude was off $1.54 to $101.93 a barrel. Brent, the benchmark North Sea crude, had fallen to $101.27 before moving up again.

Crude was just plain slammed during the month, falling 17.5%. 

The national average price of gasoline was at $3.62 a gallon, down from $3.626 a gallon on Wednesday, according to AAA's Daily Fuel Gauge Report. The price has fallen 8% since peaking in early April.

Gold was off $1.30 at $1,564.40 an ounce. But the metal ended May with a 6% loss and is off 0.2% for the year. Silver (-SI) settled down 22.6 cents to $27.76 an ounce. Silver ended down 10.5% for the month. Copper (-HG) was down 2.45 cents to $3.3655 a pound and was off 12% for the month.

One reason gold is not higher is that the euro (EURUSD) was lower against the U.S. dollar for much of the day. But, thanks to the IMF report, the currency was at $1.23686, down slightly from Wednesday's $1.23716. Today's low was $1.23442.

Interest rates were lower, with the 10-year Treasury yield falling to 1.581% from Wednesday's 1.625%. That's the lowest yield in at least 60 years.

The not-so-hot economic data
The market took its cue from four reports today. All were disappointing, though not awful.

The Institute for Supply Management-Chicago said today its barometer decreased to 52.7, the lowest since September 2009, from 56.2 in April. Readings greater than 50 signal growth. Economists had expected the report to rise to around 57. Production and new orders fell to their lowest levels since September 2009. Prices paid were the lowest since September 2010. Employment growth slowed.

Gross domestic product climbed at a 1.9% annual rate from January through March, down from a 2.2% prior estimate, the Commerce Department said. The report also showed corporate profits rose at the slowest pace in more than three years and smaller wage gains at the end of 2011.

First-time applications for unemployment insurance payments increased by 10,000 to 383,000 in the week ended May 26 from a revised 373,000 the prior week, the Labor Department reported. They exceeded the median estimate of 370,000.

Private-sector employers added 133,000 jobs in May, according to the ADP National Employment Report. Economists had expected a gain of 150,000. April's gain was revised to 113,000 from an original estimate of 119,000.

Bank of America is today's Dow winner; Wal-Mart wins for May
Fourteen of the 30 Dow stocks finished higher on the day, led by Bank of America (BAC), Walt Disney (DIS) and AT&T (T). The day's laggard was Caterpillar (CAT), off $2.56 to $87.62.

Wal-Mart Stores (WMT), up 38 cents to $65.82, was the the Dow's best performer in May, up 11%. It hit a 52-week high of $66.53. Only three other Dow stocks posted gains for the month: Disney, AT&T and Verizon Communications (VZ).

Because of Europe and its shocking $2 billion to $3 billion trading loss, JPMorgan Chase (JPM) was the Dow loser in May, down 22.9%, followed by Cisco Cystems (CSCO), down 19%, and Caterpillar, down 14.7%.

Only 120 S&P 500 stocks were higher, led by Frontier Communications (FTR), a Seattle-based telecommunications company, up 16 cents to $3.74, and pharmaceutical-maker Forest Laboratories (FRX), up $1.34 to $35.

The laggards were First Solar (FSLR) and Kohl's (KSS), down 84 cents to $12.56 and $3 to $45.82, respectively. Kohl's fell on disappointing May same-store sales. Cliffs Natural Resources (CLF) was the third-worst performer after a downgrade because of low iron-ore prices.

Twenty Nasdaq-100 stocks were higher, led by Amazon.com (AMZN) and Oracle (ORCL). The laggards were Netflix (NFLX) and Sears Holdings (SHLD).

Short hits from the markets -- New York close



Thur.

Wed.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0700%

0.070%

-22.22%

600.00%
5-year Treasury note 

0.671%

0.690%

-17.26%

-19.16%
10-year Treasury note

1.581%

1.625%

-17.44%

-15.50%
30-year Treasury bond

2.672%

2.718%

-14.06%

-7.51%
Currencies











U.S. Dollar Index

83.129

83.086

5.43%

3.24%
British pound

1.5420

1.5489

-5.06%

-0.76%
(in U.S. $)

 








U.S. $ in pounds

£0.648

£0.646

5.33%

0.76%
Euro in dollars

$1.24

$1.24

-6.61%

-4.52%
(in U.S. $)

 








U.S. $ in euros

€ 0.808

€ 0.808

7.07%

4.73%
U.S. $ in yen 

78.49

79.12

-1.88%

1.81%
U.S. $ in Chinese

6.39

6.35

1.45%

1.05%
yuan











Canada dollar

$0.969

$0.972

-4.41%

-1.27%
(in U.S. $)

 








U.S. dollar 

$1.033

$1.029

4.62%

1.28%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,564.20

$1,565.70

-6.01%

-0.17%
(per troy ounce)

 








Copper (-HG)

$3.3655

$3.390

-12.12%

-2.05%
(per pound)

 








Silver (-SI)

$27.7570

$27.9830

-10.51%

-0.57%
(per troy ounce)

 








Wheat (-ZW)

$6.4375

$6.5375

-1.64%

-1.38%
(per bushel)

 








Corn (-ZC)

$5.5525

$5.595

-12.46%

-14.11%
(per bushel)

 








Cotton 

$0.7185

0.7159

-19.63%

-21.63%
(per pound)

 








Coffee

$1.6295

1.668

-9.25%

-29.04%
(per pound)

 








Crude oil (-CL)

$86.53

$87.82

-17.49%

-12.45%
(per barrel)










 

182Comments
May 31, 2012 5:17PM
avatar
Not surprised by the market . They can manipulate it to their own liking . Not caring about U.S investors. Only interested in what goes on overseas.
May 31, 2012 5:08PM
avatar

 

 

    OH, those poor " investors"with all those "losses."  You are being fed highly purified BULL PUCKY.  Those price manipulators are going to make TONS of money off of this one,  The worries, frets, concerns, weak kneed cold sweats, etc, are nothing but excuses for their price manipulation.  The losers are the usual ones; individuals who had stop loss orders placed which got triggered and quickly snapped up by the manips. Also, individuals who bought stock on margin and have been forced to sell (again to them).  True, the value of stocks has heavily decreased, but they still have them to sell when they go back up.  NO LOSSES, BUT MAKE TONS. All that stuff going on in Europe is but a "whore's dream" for the manips. 

May 31, 2012 5:05PM
avatar

  I'm very tired of all the talk about a recession or a double dip recession. It's been going on for years already and looks to last for at least one more, (regardless of who gets elected). That's at least 3 years. I think it's time to call a duck, a duck and this, "Recession" what it really is, a DEPRESSION.

  The politicians aren't fooling anyone, but themselves, by changing the name.  We all think the same things about them, idiots, cheats, crooks, liars, do nothing fat cats, in it for themselves, the list goes on.

  There is just one thing that confuses me. I always thought that in a depression, money went along way. We don't have that today, do we. Oh, then I forgot we've got Geithner as Treasurer and Burnakee as Head of the Federal Reserve.

May 31, 2012 5:03PM
avatar
I look at these articles and I wonder???
Buy gold, take physical possession of it bury it in your back yard.
When Obama is gone, and the nanny staters in Europe have all starved, it will likely be worth about $3900 an oz.
The next 7 to 8 months will see a market drop that make the last one look like a teen prom.

May 31, 2012 5:01PM
avatar

  Im sure the whole debt thing wont cause problems.The feds would never pump money into the market or have taxpayers bail out banks.All those folks in congress who have been there for years,they never would vote for things that would screw the taxpayers.Sure glad they have term limits,whoops-they dont.

    You all better get ready,things you take for granted wont be there soon.

May 31, 2012 5:01PM
avatar
Lets see, oil DOWN 12% for the year and retail gas UP 10% for the year.  Think we are being gouged?  Where are our elected reps. in Congress to question this?  Oh yeah, most are on the take from Wall Street and the oil companies.  never mind.
May 31, 2012 4:57PM
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obama and the dummycrats ruined the economy when they passed their healthcare plan. the economy was going down in flames as soon as they did that. business will not hire because of that alone. obama is an economic buffoon.
May 31, 2012 4:56PM
avatar

The IMF will have to bail out the Spanish Banks until it, the IMF runs out of money.  Not to worry though, with as much toxic exposure that our banks have in Europe old Bendoevr Bernanke will crank up the old press and print them a few billion.  Bernanke's zero interest money brought the market back up for a while today, the banks borrowed that short term zero interest cash then ran straight to the trading desk and bought some bargains.  Tomorrow or Monday these same banks will sucker buyers in on a fool's rally, make enough to repay the Fed loan and make tidy profit.

 

Meanwhile our dollar will continue to decline in value and the speculators will keep that gallon of gasoline between $3.40 and $4.00.   You can bet the farm that once the Twister stimulus ends Bernanke is going to come up with another QE program to keep him and his Wall Street crowd rolling in cash.

May 31, 2012 4:55PM
avatar
QE3 coming to a USA near you!  free money for the people of Amer... I mean JP Morgan
May 31, 2012 4:55PM
avatar
well seeing that most people n several states have not receive their state income tax refund...wat do u xpect it will get worse theres nothing happening to help jump start the economy rite now
May 31, 2012 4:54PM
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Here's where the USA is all screwed up. We have two numb chucks running for President spending billions of dollars and were cutting educational programs everywhere.
May 31, 2012 4:52PM
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"Actually 26 points is not too bad, "

Really? I would be more inclined to say that a 26 point gain would suck at this point. Aside from that, I agree with you!
May 31, 2012 4:51PM
avatar

Why are we in so much trouble? Read On!!

 

Obama is my shepherd; I shall not work.
He keepth jobs out of the hands of the people,
Which leadeth the country to class warfare and polarization.
He encourageth sloth; he leadeth the government to new heights in deficit spending.
Yea, though I walk in the shadow of Economic collapse,
I shall fear no depression: for Obama is with me.
His handouts and monetary indiscretion supplement my income.
He maintainest spending increases in the presence of insurmountable debt;
He punisheth businesses with excessive regulations;
And giveth the hard-earned fruits of labor to the unproductive.
Surely, handouts and stimulus payments shall follow all the days of his administration;
And I will stay unemployed forever.AMEN

May 31, 2012 4:50PM
avatar
Actually 26 points is not too bad, more importantly the S&P was only down 3, compared to earlier today but, when we go back to yesterday and the whole month of May for that matter, it was a disaster. Cheaters did their thing since May the 2nd until today and like we said before, they stole more money than their last 6 or 7 months combined. Oh well, since there is no fear of getting caught, the beat will go on and on. We are sure many people thought things were reversing direction but not today, we tried, but too many of these scumbags and at about 1540 hrs or so they accelerated and thats all she wrote. The good thing is that tomorrow we start a new month, the bad thing is that job numbers will come out and we all know they are going to be horrible. Now, if they do what they love to do and come out with an inflated bogus number, who knows what will happen. Oh well, we will find out soon enough. And dam, we wont be able to buy a large soda around here anymore because of our buffoon Mayor...Maybe 2 16 ounces ones will do the trick.
May 31, 2012 4:46PM
avatar
OBAMA just does not get it!! He surrounds himself with people of the academia world when he should be surrounding himself with people who know economics, not constitutional law!!! OBAMA is NOT good for business in this country! He needs to go in NOVEMBER!!!
May 31, 2012 4:43PM
avatar
Yep, that be the one! Hurry up November!!!
May 31, 2012 4:30PM
avatar
The best thing about Wall Street is that it makes the politicians look honest.
May 31, 2012 4:27PM
avatar
If Barack Obama knocked on your door, would you sick your dog on him, or keep it in the house for fear that he might eat it?

 
May 31, 2012 4:23PM
avatar
shouldn't you wait till the end of the day? Dow is back in the solid red!
May 31, 2012 4:17PM
avatar
"maybe the Fed, Congress and the Administration need a wake-up call that the hoarding effect is already underway with the flow of money into Treasury Notes and JOBS drying up on Main Street."

Or just change the name from Main Street to Skid Road, and carry on.........  
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