Stocks ended mixed Tuesday, but the Dow managed a gain for May to post its fourth straight monthly win.
At the 4 p.m. ET closing bell, the Dow stood 0.5% lower on the day, off 86 points. The other two major indexes also climbed for the month.
Up 0.3% on the day was the Nasdaq. The broader Standard & Poor’s 500 stock index ended down 0.1%, at 2096.95 after briefly rising as high as 2103.34.
It started the day within 1.5% of its May 21, 2015, record close of 2130.82. Closing above 2100 is viewed as a key hurdle for the market to overcome as it attempts to make new highs. The 2100 level has proved difficult to vault in the past year and especially since the market’s early-year correction.
The market’s downside reversal was due in part to the market running into price levels that acted as ceilings, says Mark Arbeter, president of Arbeter Investments.
“Most indices and S&P 500 sectors are running into major chart resistance at the same time,” Arbeter told USA TODAY. “I think the market is tired and needs to recharge its batteries.
Too many market calls for a rocket shot higher.”
The stock market’s run at new highs coincides with stocks trading at above-average valuations and with corporate earnings anything but robust after three straight quarters of contracting profit growth. If stocks are to break out to the upside, earnings will have to improve.
“We see the S&P 500 finally overtaking the 2100 resistance level and then attempting to set a new all-time high,” says Sam Stovall, U.S. equity strategist at S&P Global Market Intelligence. But “we think it will be hard to hold the new high unless 2016 earnings estimates begin to move higher from the 0.1% growth currently expected” by Wall Street analysts.
Stocks have surprised to the upside in May, with the S&P 500 rallying 1.6% and the Nasdaq surging 3.3% heading into today’s session, despite increasing signals from the Janet Yellen-led Fed that a rate hike is coming this summer if the economy and job market continue to strengthen. The broad market gauge has gotten a lift from the financial sector, which has found buyers amid talk of a coming rate hike. Banks’ profit outlook improves when the spread between what they pay depositors and what they earn on loan interest widens.
Also hurting stocks today was the turnaround in crude. Oil was as high as $50.10 a barrel and now is down 43 cents, or 0.9% to $48.90.
With first-quarter earnings season all but complete, investors’ focus has shifted to incoming economic data, including the May jobs report set for release Friday and Fed policy.
Earlier today, Wall Street got mixed news on the health of the consumer. April income rose 0.4% and spending jumped 1%, which was more than analysts’ had forecast. However, consumer confidence in May disappointed. The Conference Board reported that the May confidence reading came in at 92.6, below April’s 94.7 level and below the May estimate of 96.1.
Later this week Wall Street will also be closely watching a key monetary policy meeting of the European Central Bank and an OPEC meeting, although analysts don’t expect any announcement on oil production cuts.