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Wall Street ends May lower, snapping 5-month winning streak

06-01-2011 08:24 BJT

NEW YORK, May 31 (Xinhua) -- Wall Street ended the last session of May on a strong note, but major indexes still suffered monthly losses to end a five-month wining streak, as more signs showed U.S. economic recovery was losing steam.

The blue-chip Dow Jones industrial average fell 1.9 percent for the month, while the broader Standard & Poor's 500 and the tech- heavy Nasdaq dropped 1.4 percent and 1.3 percent respectively.

After five months of strong gains, the market was losing momentum as investors became wary about the economic outlook before the second round of Federal Reserve's quantitative easing, known as QE2, ends at the end of June.

Meanwhile, a string of recent economic reports came in weaker than expected, fresh evidence that the economy was still facing headwinds when the effect of QE2 is gradually wearing off.

According to the Standard and Poor's/Case-Shiller home prices report released on Tuesday, U.S. home prices hit new recession lows in the first quarter and were back to their mid-2002 levels nationwide.

Data showed that the National Home Price Index trimmed 4.2 percent in the first quarter of 2011, following a decline of 3.6 percent in the fourth quarter of last year.

"The rebound in prices seen in 2009 and 2010 was largely due to the first-time home buyers tax credit. Excluding the results of that policy, there has been no recovery or even stabilization in home prices during or after the recent recession. Further, while last year saw signs of an economic recovery, the most recent data do not point to renewed gains," said David Blitzer, chairman of the Index Committee at Standard and Poor's.

Meanwhile, the manufacturing sector, once leading the economy on the path of recovery, also showed signs of weakening.

A separate report showed the Chicago PMI dropped sharply to 56. 6 in May from April's 67.6, much worse than economists had expected.

What's more, with oil prices hanging at 100-plus level and unemployment still high, consumers felt less optimistic about their own future and also the wider economy.

The Consumer Confidence Index unexpectedly fell to 60.8 in May from a revised 66.0 in April this year, according to the report released by the Conference Board. "Consumers are 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," said Lynn Franco, director of the Conference Board Consumer Research Center.

At Tuesday's close, the Dow rose 128.21 points, or 1.03 percent, to 12,569.79. The S&P 500 gained 14.10 points, or 1.06 percent, to 1,345.20. The Nasdaq Composite Index jumped 38.44 points, or 1.37 percent, to 2,835.30.

Editor:Yang Jie |Source: Xinhua

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