Stocks capped a winning month with a 1-percent rally Friday as traders squeezed in a few last-minute trades to close out the month of May.
After a late rally, stocks finished at or near their highs for the day: The Dow Jones Industrial Average gained 96.53, or 1.2 percent, to close at 8,500.33. The S&P 500 rose 1.4 percent and the Nasdaq advanced 1.3 percent.
Stocks struggled to hold gains throughout the day as investors were encouraged by a jump in consumer sentiment and less-bad GDP report. Oil stocks benefited from the rise in oil prices. Dell ended higher after beating its earnings target. GM ended at 75 cents a share.
The holiday-shortened week was dominated by worries about General Motors teetering on the brink of bankruptcy and the amount of growing government debt amid a slew of Treasury auctions this week.
Still, stocks rose sharply for the week—and the month.
The Dow rose 2.7 percent for the week, and 4.1 percent for the month of May.
The Dow has gained more than 20 percent in the past three months — it's biggest three-month gain since late 1998.
The S&P added 3.6 percent for the week and 5.3 percent for the month.
The Nasdaq gained 4.9 percent for the week and 3.3 percent for the month.
For this S&P, this was its biggest three-month gain since 1933 and for the Nasdaq, it's the biggest three-month gain since late 2001.
Aside from gains in the major indexes, it was encouraging to see the CBOE volatility index , widely viewed as the best gauge of fear in the market, fell 21 percent this month, ending at 28.96.
Ten out of 10 key S&P sectors finished higher for the week, led by financials, which gained 5.5 percent for the week, led by CIT Group , which jumped 22 percent. Staples were at the bottom of the totem pole, up just 1 percent. Among the sector's worst performers was coffee-cake maker Sara Lee , which dropped 5 percent.
Most bank stocks continued to rise Friday, including Citigroup, JPMorgan and Wells Fargo. But Bank of America slipped.
A group of banks and money managers plan to release a letter to the Federal Reserve Bank of New York to help fend off some rules proposed by the Obama administrationthat seek to control trading in the derivatives market, the Wall Street Journal reported.
General Motors shares fell below the symbolic $1 level Friday, ending at 75 cents, as the June 1 deadline looms and bankruptcy seems imminent. A senior administration official said a GM bankruptcy would likely take at least 60 to 90 days — perhaps longer — to complete.
Not surprisingly, GM is the Dow's worst performer year-to-date, down over 76 percent, which has prompted speculation about which stock may replace GM in the Dow.
Auto-parts maker Delphi may soon emerge from Chapter 11 bankruptcy protection, the New York Times reported. This comes a day after Ford's largest supplier, Visteon, filed for Chapter 11 bankruptcy protection for its U.S. operations.
Ford shares gained 3.4 percent to close at $5.75.
Dell gained 0.8 percent Friday after the computer maker reported its earnings tumbled 63 percent but narrowly beat analysts' expectations, helped by cost-cutting measures.
There were a couple of not-so-bad economic indicators today: Consumer sentiment improved in May to its highest level since last September as expectations for the future surged but worries about current conditions persisted. The Reuters/University of Michigan gauge of consumer sentiment rose to 68.7 in the final reading for May, higher than the 67.9 recorded mid-month and final April reading of 65.1.
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And the U.S. economy contracted at a 5.7 percent annual rate, a slightly slower pace than first reported, in the first quarter. In the initial estimate last month, economic contraction was reported at a 6.1-percent pace. However, it wasn't quite as good an improvement as economists had expected and worries about consumer spending persisted.
Corporate profits rebounded, hinting that the recession may be moderating.
However, the Chicago PMI, a measure of midwest manufacturing, slipped to 34.9 from 40.1, below the consensus of 42 and an anomaly as many manufacturing gauges have shown improvement.
"We are inclined to view the weakness in the Chicago survey as likely being due to the disproportionate influence of the auto sector in the region, so we still expect to see a further gain when the national ISM report is released next Monday," Ian Shepherdson, chief U.S. Economist at High Frequency Economics, wrote in a note to clients.
Crude oilclosed out May at $66.31 a barrel, a 30 percent gain for the month, the largest monthly percentage gain in over 10 years. It was the fourth straight monthly gain for the commodity, which has boosted the price 59 percent since the end of January.
The dollar fell to a five-month lowagainst a basket of currencies, despite a series of successful Treasurys auctions, on news that South Korea's Pension Service (NPS) would reduce exposure to U.S. government bonds and stocks in its five-year portfolio, Reuters reported.
That gave a boost to stocks that have a big overseas presence like Coca-Cola , which gets most of its revenue from abroad. Shares rose 4.8 percent, making it the biggest percentage gainer on the Dow today.
Office Depot gained 6.4 percent after JPMorgan upgraded the stock to "overweight."
Tiffany shares rose 0.9 percent after the upscale jeweler reported its profit tumbled 62 percent but hit analysts' target.
Trading was brisk today: About 1.86 billion shares changed hands on the New York Stock Exchange, well above last year's daily average of 1.49 billion. Advancers outpaced decliners, 8 to 3.
Asian and European stocks gained on Friday, boosted mainly by the basic resource sector after a report showed Japan's factory output rose 5.2 percent in April, helped by an increase copper and gold prices.
On Tap for Next Week:
MONDAY: Personal income/spending; construction spending; ISM manufacturing index
TUESDAY: Auto sales; pending-home sales; Earnings from Hovnanian
WEDNESDAY: Weekly mortgage applications; ADP employment report; ISM services index; factory orders; weekly crude inventories; Earnings from Toll Bros.
THURSDAY: NY Fed Pres. Dudley speaks; Chain-store sales; ECB, BOE rate decisions; weekly jobless claims; Earnings from Ciena
FRIDAY: May jobs report; consumer credit
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