Today's Coming Crisis Movie

Monday, May 23, 2011

Stocks: 'Sell in May' likely to continue as world markets continue their tumble

Investors have taken the old Wall Street adage of "Sell in May, then go away" to heart this year, and the stock market's slump is likely to persist during the last week of the month.

The Dow (INDU), S&P 500 (SPX) and the Nasdaq (COMP) have each lost more than 2% during the past three weeks, pressured by the latest round of economic and corporate news, which are suggesting that the economic recovery may be slowing.

Last week, reports on housing starts and existing home sales came in weaker than expected, and regional manufacturing activity slowed to the lowest level since October.

"The economy hit a soft patch entering the second quarter, and the economic reports are showing this," said Patrick Newport, U.S. economist at IHS Global Insight. "We are expecting more soft numbers in the upcoming week."

One of those numbers includes the government's second reading on first-quarter GDP. Economists are expecting economic growth to be revised to 2%, up from the initial estimate of 1.8%, but that's still lackluster, Newport said. (read more)