Stocks post third straight monthly gain in May
NEW YORK -- Wall Street sealed the third month of its spring rally with a huge advance.
Stocks shot higher right before the closing bell Friday after fluctuating on a mix of economic data. Analysts said the surge was the work of short-sellers who had bet that stocks would fall and then had to rush to buy when those bets turned out to be wrong.
A jump in commodities prices, which came on expectations that an improving economy will lift demand for raw materials, also fed the advance.
Friday's big win gave the major market indexes their third straight monthly gain and longest winning streak since October 2007. But May was the shakiest month of the spring rally that started in early March with the first signs that the economy's slide was slowing. When trading resumes Monday, investors are expected to show more of their recent skepticism about how strong the recovery will be once the recession has ended.
New worries are weighing on investors including climbing interest rates and a weaker dollar. Crude oil prices recently hit a six-month high above $66 a barrel, while the dollar on Friday sank to its lowest level in months against the euro and British pound. Some analysts say these developments are simply the consequence of a recovery in the economy and the financial markets, but others say the trends could threaten the economy's health in the long term.
Another more short-term obstacle is General Motors' expected bankruptcy filing on Monday, the automaker's restructuring deadline. The market has been factoring in the likelihood of a GM bankruptcy for months, but investors still are unsure what the fallout might be for auto suppliers and other companies.
"Technically, the market is looking quite good," said Peter Cardillo, chief market economist at the brokerage house Avalon Partners Inc. "Although, I suspect we'll probably stay within this trading range for another couple of weeks."
The Dow Jones industrial average rose 96.53, or 1.2%, to 8,500.33. The Standard & Poor's 500 index gained 12.31, or 1.4%, to 919.14, while the Nasdaq composite index rose 22.54, or 1.3%, to 1,774.33.
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