Weekly Wrap for 28-May

Continued eurozone concerns and rising tensions between North and South Korea fueled another roller coaster week. The S&P 500 plunged 4.4% at its intraweek low, rebounded to a gain of as much as 1.5% before settling up 0.2%.

Five of the 10 sectors advanced, led by consumer discretionary (+1.9%). The consumer staples sector underperformed with a loss of 1.1%. Small and mid-cap stocks outperformed, with the Russell 2000 ending up 1.9% and the S&P 400 climbing 1.7%.

The major indices kicked off the week on negative note after Spain's central bank over the weekend took control of regional savings bank CajaSur. The event acted as a reminder of the financial uncertainty in Europe.

Selling efforts continued on Tuesday, as Treasuries rallied in a flight to safety bid and the S&P 500 declined more than 3%. Rising tensions between North and South Korea added to the early selling pressure. But the market managed to rally off its lows thanks to late session buying efforts, ending the day down only 1.3%. Buying interest in the euro and news that Barney Frank said the financial reform bill's language on derivatives "goes too far" aided the recovery effort.

Stocks and commodities soared on Thursday after China reassured investors it remained committed to diversified foreign currency reserves, including the eurozone.

The market came in full circle, ending the week on a negative note regarding Spain. Fitch downgraded Spain's sovereign debt rating to AA+ from AAA.

There were several notable economic releases, though they had a relatively muted impacted on the equity market.

The housing market was in focus. Existing home sales in April rose 7.6% m/m to an annualized rate of 5.77 mln units, topping expectations of 5.62 mln. April marked the final month that existing home buyers could take advantage of the government's tax break. May's reading will be in focus to see how sales held up without the government incentive.
New home sales spiked an annualized rate of 504,000 from 411,000. That was far better than the 425,000 consensus.

Finally, the March S&P CaseShiller 20 city composite increased 2.4% y/y, short of the 3.0% consensus.

Initial jobless claims for the week ended May 22 were slightly worse than expected at 460,000 versus the 455,000 consensus. The level in claims is still too high to support long term job growth.

The second estimate of first quarter GDP was revised lower to an annualized rate of 3.0%, down from the prior reading of 3.2% and below the consensus of 3.3%. The unexpected fall was largely due to overly large inventory growth contribution forecasts.

This week also marked the last session in the month of May. The S&P 500 fell 8.2% in May, more than worst monthly performance in more than one year.

The following week will be shortened due to the markets closure Monday in recognition of Memorial Day.

Index	Started Week	Ended Week	Change	% Change	YTD %
DJIA	10193.39	10136.63	-56.76	-0.6	-2.8
Nasdaq	2229.04	2257.04	28.00	1.3	-0.5
S&P 500	1087.69	1089.41	1.72	0.2	-2.3
Russell 2000	649.29	661.61	12.32	1.9	5.8