Stocks fall to close a dismal month
They sold in May and went away, all right.
With a disappointing finish Thursday, the stock market closed what was by some measures its worst month in two years. Over five dismal weeks, Facebook fizzled, a debt crisis in Europe loomed, and nobody was in the mood to buy.
When May was mercifully over, the Dow Jones industrial average and other major indexes had erased most of the strong gains they built up through March and held onto in April.
“Any time the market dips like this, it erodes some confidence,” said Craig Callahan, co-founder and president of ICON Advisers in Denver.
The Wall Street adage holds that investors should avoid the stock market for the months of May through October, commonly known as “sell in May and go away.”
It may not be sound strategy all the time — many financial advisers say it’s foolish — but this year it looked like good advice.
The Dow lost 820 points for the month, or 6.2 percent, its worst showing since May 2010. That month, investors were spooked by a one-day “flash crash” in stocks when a large trade overwhelmed computer servers.
This May, stocks slid lower all month. The Dow closed down 26.41 points Thursday to end the month at 12,393.45. It declined on all but five of 22 trading sessions.
The Standard & Poor’s 500 index dropped 2.99 points to close at 1,310.33. It fell 6.3 percent in May, its worst month since September. The Nasdaq composite index fell 10.02 points to 2,827.34, and had its worst month in two years.
On Thursday, investors latched onto a sliver of good news in the morning: May sales from retailers such as Target and Macy’s looked healthy and sent stock futures higher.
Then the government offered two unpleasant pieces of economic data. The number of people applying for unemployment benefits rose to a five-week high, and economic growth in the first quarter of the year was slower than first thought.
Underscoring the crisis in Europe, the head of the European Central Bank, Mario Draghi, told European leaders that the setup of the 17-country euro currency union was unsustainable “unless further steps are taken.”