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Stocks Fall Ahead of Holiday

Traders unloaded shares ahead of the long Memorial Day weekend as major indexes logged solid losses for the week

Major U.S. stock indexes fell Friday as traders unloaded stocks before the Memorial Day holiday weekend. Oil futures were higher in seesaw trading, with gasoline and heating oil futures also higher amid worries about potential shortages and strong demand. A new report showed the U.S. housing market continuing its decline.

Shares of Anheuser-Busch (BUD) gained Friday on a report that the giant U.S. brewer may be purchased by Belgian Brewer InBev (INTB), according to a Financial Times blog. FT Alphaville says InBev is preparing a $46 billion bid for its rival.

Gap (GPS) managed to boost profits 40% last quarter despite the tough retail environment.

The dollar index was lower after rising Thursday amid perceptions the Federal Reserve has finished cutting rates for this year. The bond market, which closed early Friday, was higher. Gold futures were higher.

Trading was slow on Friday ahead of the three-day Memorial Day weekend, reports S&P MarketScope. U.S. financial markets will be closed Monday in observance of Memorial Day.

On Friday, the Dow Jones industrial average finished with a loss of 145.99 points, or 1.16%, at 12,479.63. The broader S&P 500 index fell 18.42 points, or 1.32%, to close at 1,375.93. The tech-heavy Nasdaq composite index dropped 19.91 points, or 0.81%, to end the session at 2,444.67.

Friday’s losses capped a rough week for the major market benchmarks, as surging energy prices and some troubling inflation reports spooked investors. The Dow fell 3.91% in the past week, while the S&P 500 fell 3.47% and the Nasdaq lost 3.33%.

Traders will look ahead to a short but action-packed week ahead in economic data, reports Action Economics. The week kicks off with the March S&P/Case-Shiller home price index and May consumer confidence on Tuesday. Durable goods orders for April follow on Wednesday. Preliminary first quarter GDP and weekly initial jobless claims are on tap for Thursday. The week wraps up on Friday with April personal income, May Chicago PMI, and final Michigan consumer sentiment for May.

July WTI crude oil futures were up $1.10 per barrel to $131.94 in late trading Friday in a choppy rebound from Thursday's profit taking slide. The market continued to be impacted by report the International Energy Agency said it is worried whether there is enough oil to meet global demand and is currently working on a review of the world's 400 largest oil fields that could lead to a major revision in its closely watched forecasts.

“While crude oil is in a powerful uptrend, we believe oil prices are quickly approaching an important intermediate-term peak, and believe this may take the temporary lid off of stock prices,” says S&P chief technical strategist Mark Arbeter.

The first quarter was "one of the most difficult retailing environments in recent memory," Gap chairman Glenn Murphy said. However, Gap managed inventory and cut costs in ways that enabled the clothing retailer, which owns the Gap, Banana Republic and Old Navy brands, to report earnings of 34 cents per share, vs. 22 cents a year ago. Revenue fell 5% to $3.38 billion.

In April, U.S. existing home sales fell 1% to a annual rate of 4.89 million -- down 17.5% from a year ago. The number of homes on the market was way up, from a 10-month supply in March to a 11.2-month supply last month. The median sales price rose from $200,100 to $202,300.

Shares of U.S. airlines were under pressure again Friday after S&P Ratings Services places its ratings on nine carriers on CreditWatch with negative implications, citing the potential severe financial damage from unprecedented high jet fuel prices: AirTran Holdings (AAI), Alaska Air (ALK), AMR Corp. (AMR), Continental Airlines (CAL), JetBlue (JBLU), Southwest Airlines (LUV), UAL Corp. (UAUA), and US Airways (LCC).

Among stocks in the news Friday, Monsanto (MON) says it has made a deal with Syngenta AG that will expand the commercial availability of its Roundup Ready 2 Yield soybean technology, growing the product's potential available acreage by 10% in the U.S.

General Motors (GM) shares fell after the company disclosed in a Form 8-K filing that the final UAW local union ratified a new labor agreement with American Axle (AXL) on May 22, stoppage that affected about 30 GM plants in North America. In the second quarter, GM said the strike is expected to have an earnings impact of about $1.8 billion.

Shares of Apple Inc. (AAPL) gained after Goldman Sachs added the stock to its Americas Conviction Buy list.

Wellcare (WCG) plans to cut its workforce by 5%. The insurance firm blamed the layoffs on changing business conditions.

Dillard's (DDS) posted earnings of 4 cents per share, vs. 53 cents a year ago, as same-store sales fell 6% and total sales dropped 4.8%. The retailer plans to close under-performing stores, reduce capital expenditures, cut costs and change its merchandise mix.

Aeropostale (ARO) reported earnings of 26 cents, vs. 18 cents a year ago, as same-store sales rose 10% and total sales rose 22%.

Foot Locker (FL) posted earnings of 14 cents per share, vs. 11 cents a year ago, as same-store sales fell 2.9% and total sales dropped 0.5%.

Major European indexes finished solidly lower Friday. In London, the FTSE 100 index lost 1.53% to 6,087.30. Paris' CAC 40 index dropped 1.89% to 4,933.77, and Germany's DAX index moved 1.79% lower to 6,944.05.

In Asia, Japan's Nikkei 225 gained 0.24% to 14,012.20, while Hong Kong's Hang Seng index lost 1.31% to 24,714.07.

Treasury market

Bond prices were higher Friday in a holiday-shortened session. The 10-year note was up 18/32 at 100-08/32 for a yield of 3.84%. The 30-year bond was up 26/32 to 96-26/32 for a yield of 4.57%.

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