Business

STOCKS SURGE IN MAY, AS ECONOMY STRUGGLES

A late-session rally yesterday helped extend Wall Street’s comeback to its third straight month, as investors continue to believe the economy has its worst days behind it.

After spending much of the day flip-flopping from positive to negative, the Dow Jones industrial average popped in the last half hour of trading to close up 96.53 points, or 1.2 percent, to 8,500.33. The S&P 500 index advanced 12.31 points, or 1.4 percent, to 919.14. The tech-heavy Nasdaq rose 22.54, or 1.3 percent, to 1,774.33.

Yesterday’s performance helped May become the third consecutive month in which stocks rose, with the Dow advancing 4 percent from April and 20 percent since hitting 12-year lows in March. Analysts said the surge was the work of short-sellers who had bet that stocks would fall and then had to rush to buy when those bets turned out to be wrong.

That stocks managed to post gains yesterday was no small feat. Yesterday, the government reported that the economy shrank 5.7 percent in the first quarter — a dismal number, but short of the 6.1 percent contraction that economists were expecting and the 6.3 percent decline reported in the fourth quarter.

Then fresh consumer confidence numbers showing Americans the most bullish they’ve been since September added to the market optimism.

However, that good news was partly offset by other data showing a dip in manufacturing, in addition to the declining dollar and rising oil prices.

Oil prices have been jumping to six-month highs as the dollar tumbles. Light, sweet crude rose $1.23 to settle at $66.31 a barrel on the New York Mercantile Exchange. Gold and silver prices rose as well.

The greenback sank to multi-month lows against several currencies, hitting $1.41 yesterday against the euro, from $1.40 the day before. Against the British pound, the dollar was trading at $1.62.