Late-day rally boosts market

NEW YORK (AP) — Wall Street sealed the third month of its spring rally with a huge advance. The fourth month looks a little less certain.

Stocks shot higher right before the closing bell Friday after fluctuating on a mix of economic data. Analysts said the surge was the work of short-sellers who had bet that stocks would fall and then had to rush to buy when those bets turned out to be wrong.

A jump in commodities prices, which came on expectations that an improving economy will lift demand for raw materials, also fed the advance.

Friday’s big win gave the major market indexes their third straight monthly gain and longest winning streak since October 2007. But May was the shakiest month of the spring rally that started in early March with the first signs that the economy’s slide was slowing. When trading resumes Monday, investors are expected to show more of their recent skepticism about how strong the recovery will be once the recession has ended.

New worries are weighing on investors including climbing interest rates and a weaker dollar. Crude oil prices recently hit a six-month high above $66 a barrel, and the dollar on Friday sank to its lowest level in months against the euro and British pound. Some analysts say these developments are simply the consequence of a recovery in the economy and the financial markets.

Another more short-term obstacle is General Motors Corp.’s expected bankruptcy filing Monday, GM’s restructuring deadline.

The Dow Jones industrial average rose 96.53, or 1.2 percent, to 8,500.33. The Standard & Poor’s 500 index gained 12.31, or 1.4 percent, to 919.14, while the Nasdaq composite index rose 22.54, or 1.3 percent, to 1,774.33.

All three indexes rose sharply for the week and, more importantly, had their third straight winning month. The Dow is up 4.1 percent for May, the S&P 500 index is up 5.3 percent, and the Nasdaq is up 3.3 percent.

Friday’s economic data prevented the market from finding a direction for much of the day. Commerce Department’s report on first-quarter gross domestic product showed the economy contracted at an annual rate of 5.7 percent, a bit more than analysts’ forecasts. Also, personal spending was revised lower. But the drop in GDP was smaller than the 6.1 percent estimated last month, and the report showed corporate profits rising.

The Chicago-area purchasing executives monthly report of Midwest manufacturing activity showed a bigger decrease in May than in April. But helping counteract that disappointing report was the University of Michigan’s index of consumer sentiment, which showed a larger-than-expected increase in May.