News from the euro zone front and euro's movement against the dollar once again dictated momentum at Wall Street for the full week that ended on Friday, 28 May 2010. Rising tension between North Korea and South Korea further added to it. For the week, indices ended in a mixed mode. Other than this, economic data dominated the week which were mixed in nature.
For the week, that ended on Friday, 28 May, 2010, Dow ended lower by 56.76 points (0.6%) at 10,136.64. Nasdaq ended higher by 28 points (1.3%) at 2257.04. S&P 500 ended higher by 1.72 points (0.2%) at 1089.41. Five of ten economic sectors ended higher led by consumer discretionary sector. Consumer staples sector led the pack of decliners. With this week's mixed end, the major indices shed almost all their year to date gains this month.
Some of the selling pressure during the week started as news came out of Europe that Spain's central bank over the last weekend took control of regional savings bank CajaSur. The event acted as a reminder of the financial uncertainty in Europe. Rising tensions between North and South Korea added to the early selling pressure.
Among economic data for the week, though they had a relatively muted impacted on the equity market, the housing market was in focus. Existing home sales in April rose 7.6% on a m-o-m basis to an annualized rate of 5.77 mln units, topping expectations of 5.62 mln. April marked the final month that existing home buyers could take advantage of the government's tax break. New home sales spiked an annualized rate of 504,000 from 411,000. That was far better than the 425,000 consensus.
Initial jobless claims for the week ended 22 May were slightly worse than expected at 460,000 versus the 455,000 consensus. The level in claims is still too high to support long term job growth.
Separately, the second estimate of first quarter GDP was revised lower to an annualized rate of 3.0%, down from the prior reading of 3.2% and below the consensus of 3.3%. The unexpected fall was largely due to overly large inventory growth contribution forecasts.
On Friday, 28 May, stocks made some dramatic swings but the broader market failed to find enough support to prevent a sharp loss that secured its worst monthly performance since February 2009.
On that day, the Dow Jones Industrial Average ended lower by 122.36 points at 10,136.63. Nasdaq ended lower by 20.63 points at 2257.04. S&P 500 ended lower by 13.65 points at 1089.41. All ten economic sectors ended in the red led by financial, energy, industrial and material sectors.
Fitch Ratings on Friday downgraded Spain's debt to AA+ from AAA, citing concerns about the country's level of debt relative to its gross domestic product.
In the currency market on Friday, the dollar index, which measures the strength of the dollar against a basket of six other currencies rose by 0.4%.
Among economic reports for the day, The Reuters/University of Michigan consumer sentiment index reported that U.S. consumer sentiment rose in May from the prior month. The report stated that the UMich index rose to 73.6 in late May from 72.2 in April. This May's reading is up from 68.7 in May 2009. However, it is below the long-term average of about 87. The report detailed that index of consumer expectations rose to 68.8 in May from 66.5 in April, while the current conditions index remained at 81.
Separately, the Commerce Department reported that consumer spending was weaker than expected in April but rising personal incomes hinted that the economy could actually be on firmer ground. Consumer spending was flat in April after six straight monthly increases. Total personal income rose by a seasonally adjusted 0.4% in April to an annual rate of $12.27 trillion. Incomes were in line with expectations.
Crude oil prices fluctuated for entire session but ultimately ended lower at Nymex on Friday, 28 May 2010. A downgrade for Spain's debt brought back concerns about a potential European debt crisis weighing on oil demand. On Friday, crude-oil futures for light sweet crude for July delivery closed at $73.97/barrel (lower by $0.58 or 0.8%). For the week, crude gained 5.6%.
Yellow metal prices managed to eke out marginal gains on Friday, 28 May 2010 at Comex. On Friday, gold for August delivery ended at $1,215 an ounce, higher by $0.60 (0.1%) an ounce on the New York Mercantile Exchange. During intra day trading, gold fell to a low of $1,203.8. For the week, gold ended higher by 3.3%. Gold ended May higher by 3%. On Friday, July Comex silver futures ended lower by 5 cents (0.3%) at $18.42 an ounce. For the week, silver ended higher by 4.3%. For May, silver shed 1.1%.
Indian ADRs ended mixed on Friday. Tata Motors was the main loser shedding 2.2% followed by HDFC Bank and ICICI Bank shedding around 1.6% each. Rediff.com gained 4.7%.
For the year, Dow, Nasdaq and S&P 500 are lower by 2.8%, 0.5% and 2.3% respectively. Friday's session marked the final trading day of the month since markets will be closed on Monday, 31 May in observance of Memorial Day.
