NEW YORK: The Dow Jones Industrial Average ended the day lower but hung on to finish higher in May, its fourth consecutive month of gains.
Investors’ new expectations for the pace of U.S. interest-rate increases changed the complexion of the markets in May, with many pivoting from worries that rising rates would hurt stocks to embracing them as a sign of a more robust economy.
Midway through the month, major indexes gave up much of their gains for the year after improving U.S. economic data and comments from Federal Reserve officials signaled that a rate rise could come as soon as June. Now the Dow industrials have gained 2.1% in 2016 and the S&P 500 is up 2.6%.
“While the economy is not booming, I think the data in the month of May have confirmed that people’s worst worries were overdone, and that’s why markets are generally up,” said David Kelly, chief global strategist at J.P. Morgan Asset Management.
The Dow Jones Industrial Average fell 86.02 points, or 0.5%, to 17787.20 on the day. The S&P 500 lost 2.10 points, or 0.1%, to 2096.96 and the Nasdaq Composite Index rose 14.55 points, or 0.3%, to 4948.05.
DuPont and Boeing were the biggest decliners in the Dow industrials. DuPont fell $1.76, or 2.6%, to $65.41. Boeing dropped 3.07, or 2.4%, to 126.15.
The tech-heavy Nasdaq Composite fared better than the Dow industrials and S&P 500 in May, rising 3.6%.The Dow industrials finished the month less than 0.1% higher, while the S&P 500 gained 1.5%. The performance gap between the two was the widest since July 2015.
May’s gains were led by some of the year’s underperformers. Technology stocks in the S&P 500 ended the month 5.3% higher and are now up 1.7% for the year.
Technology shares aren’t as sensitive to interest-rate changes as some other sectors, and earnings for the sector came in relatively strong, said Dan Morgan, senior portfolio manager at Synovus Trust Company.
Financial shares in the S&P 500 climbed 1.8% in May, paring their 2016 losses to 0.7%, with investors saying higher interest rates could boost profits at banks. The KBW Nasdaq Bank Index of large U.S. commercial lenders rose 2.6% in May, and is down 3% in 2016.
The WSJ Dollar Index, which tracks the greenback against a basket of 16 currencies, ended a three-month streak of declines, paring its losses for the year to 2.5%.
Gold for June delivery was up less than 0.1% at $1,214.80 an ounce on the day. Gold lost 5.8% in May, snapping a four-month winning streak.
The yield on the benchmark 10-year U.S. Treasury note rose slightly Tuesday to 1.834%, compared with 1.821% at the end of April.
In commodities, U.S. crude oil slipped 0.5% to $49.10 a barrel on the day but gained 6.9% in May. The Organization of the Petroleum Exporting Countries will meet later this week in Vienna but analysts don’t expect the gathering to result in any formal consensus on production cuts.
Along with the OPEC meeting, key events later in the week include a European Central Bank meeting and the last monthly U.S. jobs report before the Fed‘s meeting June 14-15. The vote over the U.K.’s membership in the European Union is scheduled for later in June.
“There’s a couple of big events on the horizon, and I’d be surprised if the market moved a lot before them,” said Michael Antonelli, equity sales trader at Robert W. Baird.