Stock Market News for May 24, 2010 - Market News

A late-session rally sent stocks higher on the last day of a tumultuous week, but broader concerns about Europe’s staggering debt problems and the health of the global economy kept investors worried.  After their biggest plunge of the year Thursday, stocks attracted some sidelined cash and gained but the advance was not sufficient to compensate for the losses recorded during the week.     

Confusions over the European debt crisis and its implications on the shared currency, the euro, kept mounting throughout the week.  With few details available as to how the unfolding crisis in the region would be contained and Germany’s unilateral move to rein in speculative trading in euro bonds, investors feared economically weak European countries would have a tough time ahead. 

Trading was volatile on Friday and the Dow average swung between gains and losses of about 100 points.  A rally in the final minutes, however, helped the blue-chip average and major stock indexes close with solid gains.  After dipping below 10,000, the Dow average closed with a gain of 125 points or 1.5%.  The broader S&P 500 index jumped 16.10 points, or 1.5%, to close at 1,087.69 and the tech heavy Nasdaq climbed 25 points or about 1.1% to 2,229.04.  Volume on the New York Stock Exchange was a heavy 2.3 billion shares where advancing shares beat those that fell in price by a three to one margin.  

After the euro’s first weekly rise against the US dollar in six weeks last week, the currency appears to be in a soft spot this morning on news of Spain's central bank, the Bank of Spain, taking over small lender, CajaSur, after its proposed merger with another lender collapsed.  Comments from a key union leader suggesting a general strike possible following Madrid's austerity moves are also weighing on the currency.  US stock futures, meanwhile, suggest stocks would open sharply lower.

The benchmark indexes, however, closed lower on the week, with the DJIA down 4%, the NASDAQ off 5%, and the S&P500 off 4.2%.  Crude prices retreated 2.2% on the week to $70.04, while safe-haven instruments such as US government bonds rose, with US Treasury 10-year bond yields down 24 basis points to 3.20%.

Twenty-eight of the 30 DJIA components closed in the green, with financial components Bank of America BAC and JP Morgan JPM leading on the upside.  The gain in financial shares came after the Senate approved the long-awaited overhaul of the financial system, removing some of the uncertainty that has been plaguing the financial services industry.  JP Morgan JPM jumped 5.9% and Bank of America BAC shares rose 4.5%; American Express AXP shared added 3.1%.

During the week all ten S&P500 industry sectors fell, led by declines in basic materials (-5.7%), industrials (-5.7%), oil and gas (5.6%), utilities (-4.9%), technology (-4.6%), health care (-4.2%), financials (-4.1%), consumer services (-3.5%), consumer goods (3.3%) and telecommunications (-2.3%).  For the year, only three of the ten sectors remain in the green, with consumer services up 5.3%, industrials up 3.5%, and financials up 2.2%.  On sectors showing losses include telecommunication (-10.1% year-to-date), oil and gas shares (-7.8%), utilities (-7.4%), and health care (-7.1%).