Stocks start June with tiny gains
After surprising to the upside last month, stocks closed almost unchanged on the first trading day of June as Wall Street weighed the economic health of China with a third straight month of slow but expanding U.S. manufacturing.
After rallying 1.5% in May -- a month that kicks off what historically has been the worst six-month stretch for stocks -- the broad Standard & Poor's 500 index rose 0.1% to close at 2099.33.
The Dow Jones industrial average, which fell nearly 90 points Tuesday and edged up 2 points, or less than 0.1%, to 17,789.67. The Nasdaq composite, which sprinted ahead 3.6% in May, also rose 0.1% to finish at 4952.25.
Stocks spent much of the day in the red as Wall Street reacted to ho-hum economic data out of China, the world's second-largest economy. China's official purchasing managers index for manufacturing came in inline with forecasts at 50.1 last month and the same level as April but still close to the below 50 level that marks contraction.
"The latest round of Chinese data has skeptics once again questioning the country’s recent stability, as well as the prospects of a sustainable recovery," Stifel economist Lindsey Piegza wrote in a client note.
But release of data showing that a closely watched U.S. manufacturing came in at 51.3 in May (anything above 50 signals expansion) and up from 50.8 in April. May marked a third straight month of expansion, helping to boost investor sentiment after a slow start to the trading session.
"Net, net, a better reading on manufacturing in May ... has to count as good news," Chris Rupkey, chief financial economist at MUFG Union Bank told USA TODAY via email.
A barrel of U.S.-produced crude trimmed its earlier losses, and was up 0.2% to about $49.21 a barrel, after briefly topping the $50 mark last week.
Investors also were reacting to warnings from the Organization for Economic Cooperation and Development. The OECD warned that the "global economy is stuck in a low growth trap," that could make it vulnerable to a more pronounced downturn, according to Bespoke Investment Group.
May, of course, is best known for the Wall Street adage, "Sell in May and go away," bucked conventional wisdom as stocks shot up despite the seasonal headwinds that typically accompany the market at the start of May.
June, however, has a bearish performance history, as well. In the past 50 years, for example, June ranks 11 out of all 12 months. In June since 1965 the Dow has posted an average negative return of 0.29% and finished higher only 46% of the time, according to data from Bespoke Investment Group.