Sell in May, Go Away? No Way

More likely >>> Buy in June ; Stocks get prune

Stocks in New York rallied in the final minutes of May trading perhaps due to some end-of-month window-dressing, after crude oil settled above $66 a barrel, the dollar continued to weaken and investors prepared to say goodbye to old General Motors.

The Dow Jones Industrial Average rose 96.53 points, or 1.2%, to 8500.33, while the S&P 500 was 12.31 points, or 1.4% higher, at 919.14. The Nasdaq was better by 22.54, or 1.3%, at 1774.33.

The late-day rally was partly fund managers readjusting portfolios for the end of the month, says Anu Sharma, managing director of the Market Intelligence Desk at Nasdaq OMX. Some of the movement also could have also been due to index managers, as today was the MSCI semiannual rebalance, and today's market caps will be used for the Russell rebalance the last day of June, he says.

For the week, the Dow was up 2.7%, the S&P 500 up 3.6%, and the Nasdaq higher by 4.9%. The expression "sell in May and go away" did not hold: The Dow was up 4.1%, the S&P 500 was higher by 5.3%, and the Nasdaq added 3.3% for the month.

Crude oil continued to rise, gaining $1.23 to settle at $66.31 a barrel, a day after data showed that inventories fell again last week, and after OPEC decided to keep its production targets unchanged, reportedly eyeing an uptick in demand. May could represent the largest monthly gain in oil futures in nearly a decade.

"The market has been signaling better demand and tighter supplies to come, and it has hard evidence, not just in the raw data but in the other macro and political factors that have been played out," writes Phil Flynn, energy analyst at Alaron Energy.

Although institutional money came into the market in the beginning of the new quarter, not a lot was put to work in the second half of April and in most of May, says Nasdaq's Sharma, calling it a trader's market. "It's starting to feel like things are moving sideways in the last month," says James Holtzman, financial adviser with Legend Financial Advisors. "You still hear a lot of optimism, but we're not really seeing it in the numbers. What it comes down to is that we're not out of the woods yet, the problems don't clear [in a] two-month rally."

But the positive is that there seem to be fairly tight trading ranges, says Nasdaq's Sharma. "It gives a sense of comfort that things will flatten out a bit, and we may not see that huge drop-off that a lot of people thought we would see," he says

Stocks overseas were mixed. In Europe, London's FTSE 100 and Frankfurt's Dax were higher by 0.7% and 0.2%, respectively, after paring gains from earlier in the session. In Asia, Japan's Nikkei and Hong Kong's Hang Seng gained 0.8% and 1.6%, respectively.