U.S. stock market lacks conviction after another up month





Many investors "are still not convinced the recovery is for real," said Kevin Mahn, portfolio manager of the SmartGrowth Mutual Funds. He points to strong fund flows into U.S. Treasurys, typically sought as a safe place to protect principal in uncertain times, "as symbolic of where market and investor sentiment is right now.

That lack of conviction, he said, is made worse by the uncertainty that comes with sovereign debt concerns and reports of a federal criminal investigation of investment bank Goldman Sachs Group Inc. /quotes/comstock/13*!gs/quotes/nls/gs (GS 145.20, -15.04, -9.39%) .

On Friday, the bulls turned tail, with the S&P 500 /quotes/comstock/21z!i1:in\x (SPX 1,187, -20.10, -1.67%) sliding 1.7% to 1,187, leaving it down 2.5% for the week as Goldman Sachs and other worries weighed, especially on the financial sector.

But the broad market gauge still gained in April, up 1.5%. That's better than April's historic average return of 1.3%, according to Stovall.

May, on the other hand, has to contend with its questionable past performance.

The S&P 500 "hasn't fared too well since 1928, as it posted a slight decline on average, ranking it only number 10 of 12 months," Sam Stovall, chief investment strategist at Standard & Poor's, wrote Friday in a note.

The S&P 500 could suffer as much as a 10% to 15% correction, but the pullback would likely not bring an end to the current bull market, Stovall and his colleagues believe.

May's somewhat dismal ranking can be misleading. The index's relative performance in May has been climbing over the decades, placing in the eighth spot if one only looks back to 1945, and rising to an even loftier sixth position since 1970.

Better yet, May has been the best-performing month of the year since 1990, casting a more bullish light on the month that conjures the adage "Sell in May."


Crude-oil prices gained 2.8% in April, while gold settled at a four-month high, rising m nearly 6% during the month.