The seven straight gains for the S&P 500 recently were the 11th time that this has taken place in the past five years. It shows this market has a mind to go higher despite the ostensible outside concerns such as the terrorist bombing in the U.K., a China credit-rating downgrade, deepening concerns about the Trump administration’s collusion with the Russians, the testing of another North Korean missile launch, and the Federal Reserve’s determination to raise rates and reduce its $4.5 trillion balance sheet.

Following yesterday’s selloff, things appeared as if they wanted to make amends today. All of the various indices shot out higher right on the opening. However, the three major indices all fell short today. The DOW lost 20 to close the month of May at 21,008, the S&P 500 dropped 1 point, and the NASDAQ fell back 4 points today. 

Some “experts” attributed the light fallback to the April pending home sales that declined by 1.4%. This was the lowest since June 2014…but this was a function of the lack of supply. These are homes for which there are signed contracts. On the other hand, the May Chicago Purchasing Managers’ Survey rose to its best level in over two years with a gain up to 59.4. 

Leading the downside today was another horrible performance by the banks. DOW components GS and JPM  lost 3% and 2% respectively today for their second straight day of large declines. In addition, the energy stocks were lower on a decline in crude oil prices down to $48.32 due to increased Libyan production. This should be a good thing for consumers now that the summer driving season is underway.

Breadth numbers were negative at a 12/17 downside ratio and the VIX was higher by .64 up to 11.02.

May was a very good month for the market as the DOW closed over 21,000, the S&P gained 1%, and the NASDAQ added more than 2%.

Bond yields were lower with the 10-year Treasury Note down to 2,20%. This is the lowest it’s been in almost three months and one wonders how the Fed can keep raising rates under these circumstances. The dollar was weaker against the Euro at 1.1236 and the Japanese yen was 110.6 to the dollar. Gold gained on the higher Euro and lower interest rate situation.

Donald M. Selkin

These are excerpts from Don Selkin’s Daily Market Notes, abbreviated and updated with permission from the author. Don Selkin is the Chief Market Strategist at Newbridge Securities Corporation, member FINRA/SIPC and provides the Fair Value analysis for CNBC each morning.  The commentary provided in this Market Letter is intended to provide timely market analysis and should not be considered a research report.  This Market Letter may contain, and is limited to: Discussions of broad based indices; Commentaries on economic, political or market conditions; Technical analyses concerning the demand and supply for a sector, index or industry based in trading volume and price; Statistical summaries of multiple companies’ financial data, including listings of current ratings; and, Recommendations regarding increasing or decreasing holdings in particular industries or securities.  This Market Letter does not make a financial or investment recommendation or otherwise promotes a product or service of the firm.  This Market Letter contains only news, facts, and commentary on information previously reported from a news source believed to be accurate and reliable by the author.  These news sources include the following: Bloomberg Financial, Reuters, and the Associated Press.