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 4:12PM
avatar

"Jobs data point to loss of momentum in recovery"

 

Don't worry this type of information is not relevant in this market as investors will just "shrug it off".  I just find it contradictory that when there is all kinds of negative economic news the market hardly goes down but just one little random piece of positive news and the market "soars".  This is typical behavior of a propped up market.  At some point...it will crash.

May 31, 2012 3:40PM
avatar
DOUBLE DIP RECESSION .. 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.  It is time politicians get off their soap boxes and put up their golf clubs and get busy with a fiscal and monetary policy to get America's economy back from the edge of deja vu.
May 31, 2012 3:39PM
avatar

I glance at the markets and I know all this is rigged by the bankers, like JP Morgan, Goldman, Bank of America, and Citi all these banks are  walking dead Zombie banks.

May 31, 2012 3:38PM
avatar

Quote: OK, I have to ask: what is with all the personal attacks?! I thought this was a message board for posting opinions, facts, ideas, etc. IN AN ADULT MANNER. Instead, I see blind dogma, profanity and immature, vulgar remarks. Wow...I'm so impressed...NOT.

 

Listen to many of the pundits on the left and right, similar language.  Ever since trash talking became acceptable in sports it seems as though civility has taken a back seat. 

May 31, 2012 3:34PM
avatar
The Fed is giving the banks mony for near zero interest and the tax payers are pay for this sillyness. Please stop this!!!
May 31, 2012 3:25PM
avatar

Worries build on a job report from tomorrow?  Who in Heck knew there was another Jobs report coming out.  And of course you know what MSN will write.  It didn't meet up to "Wall Street Expectations" Yesterday we were worried about the spanish banks and we used the old cliche that the sky is falling in, the sky is falling in.  And now all of a sudden we have forgotten about that. And why is that? Because MSN reports that the cheap skate buyers are out there buying because the price is right!  I said that yesterday that today would be an up day because they want to pay cheap prices for stock.  But my problem is why do people sell their stock at a lower price and end of losing money when they know full well that the government only lets them write off so much on their taxes?  And to think that there are people who believe that the stock market is the true economic indicator!  Ya, tell me another thing.  When you let the economic welfare of a nation in the hands of ignorant people who buy and sell their stock as well as sales people that don't know the first thing about economics, no wonder we have the problems that we do!!!!!

May 31, 2012 3:23PM
avatar

OK, I have to ask: what is with all the personal attacks?! I thought this was a message board for posting opinions, facts, ideas, etc. IN AN ADULT MANNER. Instead, I see blind dogma, profanity and immature, vulgar remarks. Wow...I'm so impressed...NOT.

May 31, 2012 3:19PM
avatar

I leave all you Republican Nazi Fascists with a thumb up. NOW SIT AND TAKE A SPIN ON IT A$$HOLES!

May 31, 2012 3:15PM
avatar
Dead Cat = When the Market fluctuates downward..

Not my term = open to others.

May 31, 2012 3:10PM
avatar
FB is rebounding: up .64%, Maybe that's what the good news is that is helping the dead cat try to get back up?
May 31, 2012 3:06PM
May 31, 2012 2:58PM
avatar
obame did not sigh up for the military    he said he was from Kenya
May 31, 2012 2:54PM
avatar
That's GREAT news! We're saved!!!!!
May 31, 2012 2:54PM
avatar
STORMIN BACK...WOO-HOO...HOW bout them slimeballs (Hedge Funds clowns, Brokers et al) boy are they jerkin' their jazz gyratin' shorts and buys today....up, down...up,down...boy are they chokin' the chicken hard!!!! 
May 31, 2012 2:51PM
avatar
This rumored IMF bailout for Sapin is all due to an "annonyous source". Funny how financial sites slice off the rumors they like while the actual IMF spokesmen is quoted as saying the opposite. How nice when rumors are more convenient then facts.
May 31, 2012 2:46PM
avatar
Last one of the day.

LostOnEarth: Your poll is typical of how you folks do polling.

Gota go - your mom's at the door again - please come get her.
May 31, 2012 2:43PM
avatar

Latest poll: What people think Republicans would do?

 

Thumbs UP if you think Republicans would sell their Mothers for a quick profit.

 

Thumbs DOWN if you think Republicans would rent or lease their Mothers out for a consistent long term cash flow.

May 31, 2012 2:38PM
avatar
"The next co-host of the view, former president of the united states BHO. Coming in January. "

I can see it now. "Obama sits on Whoopie's Cushion."
May 31, 2012 2:32PM
avatar
The next co-host of the view, former president of the united states BHO. Coming in January.
May 31, 2012 2:24PM
avatar
ETHOS = A good name for the next RIM OS ;)

Update: lostonearth is also a good name for my blackberry's new OS.
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