By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks fell sharply Friday
afternoon as Wall Street readied to close another month of gains
with a whimper after mixed economic reports.
"We've had a week of mediocre news for the United States; not a
soft patch, not concerning, but certainly not inspiring," said Jim
Russell, senior equity strategist for U.S. Bank Wealth Management
in Cincinnati.
"We would like to see a quiet summer, where the market marks
some time and consolidates some recent gains," added Russell of
Wall Street's advance, which has the Dow Jones Industrial Average
(DJI) ahead 2.5%, the S&P 500 index (SPX) up 2.8%, and the
Nasdaq Composite (RIXF) up 4.4% for the month.
After falling by as much as 120 points and rising as much as 67,
the Dow Jones Industrial Average (DJI) was lately off 116.21 points
at 15,208.32.
Intel Corp. (INTC) led gains that included just two of the
blue-chip index's 30 components. Intel's gains came a day after
Reuters reported Samsung Electronics had picked an Intel processor
to power a new version of one of its tablets.
The S&P 500 index (SPX) declined 12.88 points to 1,641.53,
with health care and energy hardest hit among its 10 industry
groups.
Financials have performed the best in May, followed by
industrials and technology, with investors rotating in and out of
sectors in search of bargains.
"With interest rates being revalued, stocks are being revalued
too. We haven't seen the 'great rotation' (out of bonds and into
stocks), but we are seeing rotation within the stock market
itself," said J.J. Kinahan, chief strategist at TD Ameritrade.
The S&P 500 is poised for its seventh monthly advance, which
would mark its longest monthly winning streak since one ending in
September 2009. The Dow industrials are on track for their sixth
straight monthly gain.
"I think bulls would consider it a victory to come out of today
with even a small loss. There has been so much pressure from Asia
all week, and yet the S&P has hung in there," said Kinahan.
The U.S. dollar (DXY) on Friday fell to a three-week low against
the Japanese yen (USDJPY), with the American currency on track for
an eighth straight month of gains versus the yen. Expectations of
monetary easing moves by the Bank of Japan is expected to result in
further softening of Japan's currency.
The Nasdaq Composite (RIXF) lost 15.86 points to 3,475.44.
For every stock rising, roughly four fell on the New York Stock
Exchange, where 500 million shares traded as of 3:40 p.m.
Eastern.
Composite volume topped 2.8 billion.
Equities had shed their losses and turned higher after the
release of the Thomson Reuters/University of Michigan's final index
of consumer sentiment, which climbed to 84.5 for May, topping
forecasts and hitting its highest level since 2007.
"The consumer sentiment is very encouraging for the market
overall; we had a quick bounce when that number came out," said
Kinahan at TD Ameritrade.
Casting the largest chunk of the U.S. economy on uncertain
footing, the Commerce Department on Friday reported household
purchases declined 0.2% last month, following a 0.1% rise in March;
incomes were static.
Equity futures held their drop after the spending report.
Separately, the Chicago PMI jumped to 58.7 in May, its best
reading in more than a year.
"The numbers paint the same picture we've seen for a while. The
economy is growing, albeit we'd love 5% GDP, but the 2.5% GDP is a
fine level; most CEOs say they can continue to make money," said
Kinahan.
Dell Inc. (DELL) rose 1% as founder Michael Dell, the computer
maker's board of directors and its private-equity partners faced a
lawsuit by shareholders contesting Dell's effort to take the
company private.
Dell on Friday urged shareholders to vote for the $24.4 billion
buyout offer led by CEO Dell at a special meeting July 18, calling
it better than other options.
Among movers, Krispy Kreme Doughnuts Inc. (KKD)climbed after the
doughnut maker beat first-quarter profit and revenue estimates and
raised its outlook for the year.
U.S. stocks gained on Thursday as reports on economic growth and
jobless claims heightened thinking that the Federal Reserve would
continue its level of monthly bond purchases.
The central bank's monetary easing is a major factor in the bull
market, now in its fourth year.
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