SLB Schlumberger Ltd

After a volatile trading session, indices finally ended with modest gains buoyed by optimism over Greece’s new plans to tackle its debt crisis. However, on a monthly basis, benchmarks were left lingering in the red. Markets had dropped down during the session as weak economic data weighed on investor sentiment, but rebounded ahead of the close and almost touched the levels benchmarks were closing in on in the morning.

The Dow Jones Industrial Average (DJIA) was up 1.0% to close at 12,569.79. The Standard & Poor 500 (S&P 500) closed with gains of 1.1% at 1,345.20. The Nasdaq Composite Index climbed up 1.4% to settle at 2,835.30.  The fear-gauge CBOE Volatility Index climbed above 16. On the New York Stock Exchange, AMEX and Nasdaq, consolidated volumes were 8.2 billion shares compared with last year's daily average of 8.47 billion. The benchmarks recorded their fourth consecutive week of losses for the week ending May 27 and also ended in the red for the month of May. For May, the Dow, S&P 500 and Nasdaq dropped 1.9%, 1.3% and 1.4%, respectively. This was also the worst monthly performance for the S&P 500 since last August.

As reports made the rounds that European Officials, particularly Germany, have agreed to move away from their earlier demand making way for a new loan package for debt-ridden Greece, investor sentiment gained strength. This development pulled US indices out of the gloom created by weak economic data and also lifted global shares. According to the Wall Street Journal, Germany “is considering dropping its push for an early rescheduling of Greek bonds in order to facilitate a new package of aid for Greece.” This will expectedly delay Greece’s debt restructuring. European Officials are considering a second bailout package.

Though the day ended with modest gains, larger concerns still remain about the economic recovery. Economic data that was released on Tuesday all showed a negative trend with consumer confidence declining, US single family home prices dropping below their 2009 level and US Midwest business activity growing  at a slower rate.

The consumer confidence index declined for the month of May after an improvement in April. The Conference Board reported the consumer confidence index has dropped to 60.8 in May from 66.0 in April. The Present Situation Index and the Expectations Index declined to 39.3 from 40.2 and to 75.2 from 83.2, respectively. Inflationary worries and concerns about the employment situation were reasoned to have led to the declines. Lynn Franco, Director of The Conference Board Consumer Research Center, said: “A more pessimistic outlook is the primary reason for this month’s decline in consumer confidence. Consumers are considerably more apprehensive about future business and labor market conditions as well as their income prospects. Inflation concerns, which had eased last month, have picked up once again. On the other hand, consumers’ assessment of current conditions declined only modestly, suggesting no significant pickup or deterioration in the pace of growth.”

The S&P/Case-Shiller Home Price Indices declined below their 2009 level, a period when the economy was reeling under a recession. The 20-city index that tracks changes in home prices throughout the United States was at 138.16 compared to the April 2009 low of 139.26. The 20-city index had sunk 0.2% in March from February.

Meanwhile, the Institute for Supply Management-Chicago reported that the Chicago Purchasing Managers Index has dropped to 56.6 in May from 67.6 in April. The index is a regional indicator of the economic health of the manufacturing sector in Illinois, Indiana and Michigan. The index dropped more than the estimate of a drop to 62.6. The index is based on five major indicators: new orders, inventory levels, production, supplier deliveries, and the employment environment. A reading above 50 represents expansion of the manufacturing sector, compared to the previous month.

On a sectoral basis, energy stocks had a volatile run as crude prices shifted between gains and losses. The energy sector was at its highest level since 2008 going into May. Crude prices have fluctuated from a high of $115 to levels below the $100 per barrel mark. The sector has consequently felt the burn but still remains in the positive zone. For the month, sweet crude had dropped 9.9% and on Tuesday, crude prices jumped 2% to settle at $102.70 per barrel. Gainers for this sector for the day include Chevron Corp. (NYSE:CVX), BP plc (NYSE:BP), Transocean Ltd. (NYSE:RIG), Schlumberger Limited (NYSE:SLB) and Exxon Mobil Corporation (NYSE:XOM) and they surged 1.7%, 1.5%, 0.5%, 1.2% and 1.0%, respectively.

The technology sector also pushed the markets up, with Cisco Systems, Inc. (NASDAQ:CSCO) being one of the leading gainers among the Dow components as it surged 2.1%. Other gainers included Apple Inc. (NASDAQ:AAPL), Google Inc. (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), Intel Corporation (NASDAQ:INTC) and Hewlett-Packard Company (NYSE:HPQ) and these share were up 3.1%, 1.6%, 1.0%, 1.4% and 1.1%, respectively.

 
APPLE INC (AAPL): Free Stock Analysis Report
 
BP PLC (BP): Free Stock Analysis Report
 
CISCO SYSTEMS (CSCO): Free Stock Analysis Report
 
CHEVRON CORP (CVX): Free Stock Analysis Report
 
GOOGLE INC-CL A (GOOG): Free Stock Analysis Report
 
HEWLETT PACKARD (HPQ): Free Stock Analysis Report
 
INTEL CORP (INTC): Free Stock Analysis Report
 
MICROSOFT CORP (MSFT): Free Stock Analysis Report
 
TRANSOCEAN LTD (RIG): Free Stock Analysis Report
 
SCHLUMBERGER LT (SLB): Free Stock Analysis Report
 
EXXON MOBIL CRP (XOM): Free Stock Analysis Report
 
Zacks Investment Research