Wall Street ended a miserable month with an aggressive selloff just before the bell that seemed like a fitting ending to the market's worst May in nearly 50 years.
The last hour before the Memorial Day weekend featured some seesaw market movements, but the averages could get no closer than 0.4 percent or so from breakeven. The end result was a loss of more than 1.2 percent for the Dow and S&P 500 and a nearly 1 percent drop for the Nasdaq.
A rating agency downgrade of Spain loomed largest in the selling, but the market dropped off the beginning and never saw positive numbers all day.
Fitch's lowered its Spain rating to "AA+" even though it said the outlook for the nation was stable. But it was enough to rekindle European debt fears and push the averages to the market's worst May since 1962 and the worst overall month since November 2008.
Most sectors on the Standard & Poor's 500 were lower, with financials and energy the worst of the group. The utilities sector was barely positive and consumer staples and health care suffered the least damage of the sectors that finished negative.
Procter & Gamble and Coca-Cola were the best performers on the Dow, which saw only three companies in green numbers. Bank of America and Disney dragged on the bluechips which saw seven companies suffer losses of better than 2 percent.
Apple was among the best of the Nasdaq tech barometer. BofA Merrill Global Research raised its price target on the company to $325 and maintained its buy rating.
Investors had been looking for direction from a batch of economic reports, but found little to hang their hats on.
The government said incomes rose 0.4 percent in April—equal to the growth in March—but consumers remained wary and did not increase their spending, choosing instead to boost the savings rate to 3.6 percent from 3.1 percent.
Consumer confidence numbers came about in line with expectations.
In corporate news, Prudential is trying to renegotiate the $35.5 billion price tag on the Asian businesses of AIG in a last-ditch attempt to win over some of its biggest investors and head off a “no” vote on its planned takeover of AIA.
And Goldman Sachs is seeking to settle with the Securities and Exchange Commission to avoid a fraud charge which could result from the lawsuit filed by the agency last month, according to the Wall Street Journal.
BP reversed some of the previous day's gains on news that CEO Tony Hayward emailed staff that the "top kill" strategy the company is employing to contain the Gulf of Mexico oil spill has an uncertain chance of success.
Oil prices surrendered earlier gains, with crude slipping below $74 a barrel. Gold moved higher on the Spain downgrade. The dollar edged higher against a basket of foreign currencies while the euro nudged higher against the greenback. Treasurys also rose, with the benchmark 10-year note last yielding 3.30 percent, compared to 3.36 percent late Thursday.
Elsewhere, Toys "R" Us is planning an $800 million initial public offering in the latest big private equity deal. The company will trade under the ticker "TOYS."
Internet-monitoring equipment maker Blue Coat Systems shares plunged after it posted weak fourth-quarter earnings Thursday.
King Pharmaceuticals shares gained 3 percent amid a frenzy of call option buying indicating strongly bullish sentiment. Options traders exchanged 8,597 contracts on the stock within the first 90 minutes of trading, aiming for a $10.19 breakeven level for June, according to data from Interactive Brokers.
Market breadth took a decidedly negative tone as the afternoon went on, with losers beating gainers more than 2.5 to 1.