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Stocks end sharply higher, but down for May

The Dow fell about 240 points in May, which ended a five-month stretch of gains. Stocks closed higher on Tuesday with news of a possible Greek bailout package.

Traders gather around specialist Christopher Gildea, right, at his post on the floor of the New York Stock Exchange Tuesday, May 31, 2011. Stocks ended higher on Tuesday, amid enthusiasm for a possible Greek bailout package.

Richard Drew / AP

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By Abby Schultz and JeeYeon Park,

Stocks ended higher for the day on optimism over prospects of a Greek bailout package, despite several reports of economic weakness, but the gains weren't enough to erase a month of losses.

The Dow Jones Industrial Average fell 240.90 points in May or 1.9 percent to close at 12,569.64, snapping a five-month winning streak. For Tuesday, the blue chip average gained 128.06 points or 1.03 percent.

Most Dow components gained, with Intel among the lead performers. The chipmaker unveiled a new category of laptops its calling Ultrabooks at a trade show in Taiwan.

Cisco also climbed after the tech bellwether said it has collaborated with SAP to in order to deliver enhanced business intelligence solutions for enterprises.

The S&P 500 fell 18.41 points in May, or 1.35 percent, to close at 1,345.20. On Tuesday, the broad market index rose 14.10 points or 1.06 percent.

The Nasdaq fell 38.24 points in May, or 1.33 percent, to close at 2,835.30. On Tuesday, the tech-heavy index gained 38.44 points, or 1.4 percent.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 16 on Tuesday.

The worst performers of the month included global industrial firms, including Cummins, which fell 12.4 percent in May, Deere, which fell 11.7 percent, and Caterpillar, which fell 8.3 percent.

Caterpillar was also the worst performing Dow stock in May, accounting for 30 percent of the blue chip average's losses.

Stocks initially got a boost from news some officials in Germany will allow Greece to restructure its debt.

That news also pushed the euro to a three-week high against the dollar and oil prices also gained. U.S. light, sweet crude rose 2 percent Tuesday to $102.70 a barrel; for the month, sweet crude fell 9.86 percent. In London, Brent crude climbed 1.79 percent to $116.73. For the month, Brent fell 7.28 percent.

Precious metals fell, as gold 0.03 percent to settle at $1,535.90 an ounce. For the month, gold fell 1.29 percent. Silver rose slightly on Tuesday to settle at $38.30 an ounce, but fell more than 21 percent for the month.

The brighter performance for stocks on the last day of the month is unlikely to turn around the market's negative performance in May. As of Friday, the Dow was down nearly 3 percent, the S&P 500 was down 2.4 percent, and the Nasdaq was down 2.7 percent. All major indices remain higher for the year, however.

If history is a guide, stocks won't turn around in June. The Dow has fallen for the last six Junes, and has been up only twice since 2000. Overall, the market has been down in June in the last four years.

Several key economic reports are expected later this week to reveal more about the state of the nation’s manufacturing output and jobs growth, said Phil Orlando, chief equity market strategist at Federated Investors.

The numbers are unlikely to show the economy or jobs growth gaining strength, Orlando said, but he does believe that many of the headwinds facing the U.S. are transitory and will become less of a factor as the year goes on.

These headwinds include the supply disruptions from the Japan earthquake, severe April weather, and the debate over the nation’s debt ceiling, Orlando said. The low point in quarterly growth was probably in 1.8 percent gain of the first quarter, he said.


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