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)










 

189Comments
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 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 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 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 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 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 2:23PM
avatar
"Here is what I asked last year- Do you have any
prescriptions for America's success, or just choosing
to focus on the negative to enhance a political agenda?"

1. Cut foreign economic aid by 75 - 80%
2. Cut all free Military aid. ( Military aid paid for is fine. Let's make it profitable. ) 
3. Privatize any feasible government entity. ( Obviously not all of them, so don't go there. )
4. Cut imports by 50% to start. ( Make it here, or do without.)
5. Drill at home. ( Sell a percentage of the oil to pay down the debt. )
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 4:54PM
avatar
Heard this AM, Obama and his henchman gave ONE BILLION in 2009, (QE1, don't you know)  to several battery companies to start up and gear up for the electric car surge!
ONE BILLION of our taxpayer dollars to start companies to create batteries for the new sensation the VOLT!
Lot's of photo ops, chest pounding , back slapping and crowing about a new industry that I created, new technology, me, me , me blah, blah
This was back in 09 when these factories were being built and/or converted.

Now, get ready, here is the genius of the Obama administration, it's not enough to fund a project, the government has to tell these companies how to run the company !

a) How much production the factory should maintain from DAY 1- YES FROM DAY 1 (Supply and demand- what's that?)

b) how many people it must employee

These stipulations were inserted into the financing.
What happened?
These companies spent ALL the money.
Geared up to make 10,000 batteries per week, as per thew mandate !
One small problem, however --- SURPRISE
 
THERE IS NO MARKET, NO BUSINESS !
The Chevy Volt sold less than 50,000 cars. By this time,  according to Obuma's crowing, they were to have sold ONE MILLION electric cars.
There was going to be this HUGE demand!

The end game - ALL these companies just went belly up. Done, finished.
One BILLION DOLLARS PISSED AWAY!
Thank you dear leader , thank you!

All for a photo op and the ability to say me, me, me.
This is yet another classic example of why the government can't make decisions on which product wins or loses. Why they shouldn't interfere with free enterprise.
They can't run anything. The government is run by losers that can't create or sell or market.
THAT'S WHY THEY ARE WORKING IN GOV, in the first place !

The post office ?  HOW DO YOU SCREW THAT UP,  Seriously?
HOW?
The ONLY game in town for 150 years and it's broke?
 
We need MUCH smaller , much less intrusive government -- NOT MORE.
We need to eliminate the fat, not add more deadbeats to the payroll.
Finally, this is why you can't elect a bumbling, ex college professor , ex community organizer as President  !!!
Forget all the negative baggage he has and there is plenty.
He doesn't know, that he doesn't know --- THAT'S THE PROBLEM !!
We can't have a cretin in charge.
What a disgrace.
Yes, 4 more years of idiocy !
May 31, 2012 5:31PM
avatar
But Obama says the economy has recovered and everything is hunky dorie thanks to his hard work!  LOL!!!
May 31, 2012 4:30PM
avatar
The best thing about Wall Street is that it makes the politicians look honest.
May 31, 2012 2:58PM
avatar
obame did not sigh up for the military    he said he was from Kenya
May 31, 2012 8:33PM
avatar
RELATED STORY: CEO GETS $65.7M FAREWELL???  For What?!?  Obviously not good management!  How many out-of-work individuals could you employ for how many  years with that budget?  If we want the economy to grow, stop letting these rich A-Holes rip everyone off and start focusing the money on producing something in our economy!  No economy can survive on the "service-sector" alone - we need to produce some actual, tangible products.  This is why we saw FaceFlop.  What does FaceFlop produce?
May 31, 2012 4:43PM
avatar
Yep, that be the one! Hurry up November!!!
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 5:49PM
avatar
"If oil is below $87.00, why is gasoline still over $3.50 a gallon? "

Forget about it! Oil could drop to $50 and stay there, and they'd just up the gas tax to create more tax revenue. The days of under $3 gas are history, regardless of the price of oil.
May 31, 2012 2:09PM
avatar

"The Dow and S&P 500 briefly push into the black on hopes for IMF aid to Spain"

 

I guess this means the US is going to bail out Spain, since we are the biggest stake holder in the the IMF. The process:

 

The US borrows' the money and gives it to the IMF.

The IMF lends it to Spain.

Spain pays back the European banks.

Spain tells the IMF we cannot pay you back.

The IMF tells the US you need to give us more money because Spain will default.

The US asks how much? 

The IMF, when we tell you to stop.

The Federal Reserve comes up with a new stimulus, QEE - Quantitative Easing Europe.

 

 

May 31, 2012 4:57PM
avatar
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 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 4:55PM
avatar
QE3 coming to a USA near you!  free money for the people of Amer... I mean JP Morgan
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