Dow suffers worst monthly loss in 2 years

Updated: 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.

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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)