Stocks plummet in late trading but end May higher
NEW YORK — Stocks dropped sharply in late Wall Street trading on Friday but still managed to end the month higher.
After moving between small losses and gains for most of the day, the stock market started to drift lower in afternoon trading. The sell-off accelerated in the final hour. The Dow Jones industrial average ended the day with its biggest loss in nearly six weeks, falling more than 200 points.
Some traders said the sudden afternoon swoon was the result of investors rebalancing their holdings at the end of the month. As stocks fell, bonds rallied. The yield on the 10-year Treasury note, which had risen as high as 2.20 percent during the day, fell back to 2.13 percent in late trading. Yield falls as bond prices rise.
On Friday, there was both encouraging and disappointing news on the economy.
Stock indexes started the day slightly lower after the government reported that Americans cut back on spending. Consumer spending fell 0.2 percent in April, the first decline since last May, the Commerce Department said early Friday.
That news was offset by a report released later showing that a measure of consumer confidence jumped to the highest level in almost six years in May, lifted by rising home prices and record-high stock prices.
The University of Michigan's consumer sentiment index rose to 84.5 in May, up from 76.4 in April and the highest since July 2007. Investors are hoping that increasingly confident consumers will step up their spending, which would contribute to economic growth.
The Dow closed down 208.96 points, or 1.4 percent, to 15,115.57.
It was the biggest loss for the index since April 15, when markets plunged after worries about an economic slowdown in China caused commodity prices to drop sharply.
The Standard & Poor's 500 index fell 23.67, or 1.4 percent, to 1,630.74. The Nasdaq composite declined 35.38 points, or 1 percent, to 3,455.91.
In government bond trading, the yield on the 10-year Treasury note rose to 2.13 percent from 2.12 percent late Thursday. The yield has risen by half a percentage point since the start of the month and is the highest it's been since April 2012.
Rates have risen on concern that the Federal Reserve is considering easing back on its purchases of $85 billion in bonds every month.
The sharp rise in Treasury yields could be trouble for the market if it continues unabated, said David Bianco, chief U.S. equity strategist at Deutsche Bank. The yields on Treasury notes are benchmarks for setting interest rates on many kinds of loans to consumers and businesses. If they rise quickly, lending rates would rise, holding back the economy by discouraging borrowing and spending.
“I'm not bearish, but I'm a little bit cautious,” Bianco said.
The Dow ended up 1.9 percent for the month, its sixth straight monthly gain. The S&P 500 index rose by 2.1 percent in May and has gained for seven months straight, the longest winning streak since 2009.
The S&P 500 has only fallen in one month, October, over the last year.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Trib Total Media puts 9 Western Pa. newspapers up for sale
- Cabrio is lively, luxury alternative to muscle car
- Turbulent week on Wall Street leaves investors wondering what’s next
- Mylan shareholders approve $34 billion hostile takeover bid for Perrigo
- Mazda 6 is a real ‘looker’ — gets more glances than sales
- Regulators expect lawsuit over oil, gas rules process
- Rankings: CEO pay 200 times median
- Marcellus shale drillers, Pa. settle 3 cases of fouling water supplies, pay $374K
- Millions unwilling to choose just 1 job
- Pa. unemployment held at 5.4% for July; service sector gains offset losses elsewhere
- U.S. Steel freezes traditional pensions for long-serving nonunion staff