NEW YORK — Stocks closed out their worst month in more than a year by sliding again on more unsettling news about Europe.
The Dow Jones industrials dropped 122 points Friday after Fitch Ratings gave Spain the second downgrade of its credit rating in a month. The rating agency’s action was another reminder to traders of the long-term economic problems still facing several European countries, and perhaps the rest of the continent and the global economy as well.
May was difficult as persistent and intensifying worries about Europe’s debt problems sent the Dow down 7.9 percent and the broader Standard & Poor’s 500 index down 8.2 percent. Both indexes had their worst monthly performance since February 2009, the month before stocks began their recovery from 12-year lows. The Dow had its biggest May drop since 1962.
The last trading day of May fit the pattern of the rest of the month. Stocks alternately plunged and recovered, then dropped late in the day as investors facing a three-day Memorial Day weekend decided to play it safe and sell.
Stocks were already down before the news about Spain broke in early afternoon.
“People are worried about Europe, and we’re seeing a knee-jerk reaction, particularly ahead of a long weekend,” said Joe Heider, a principal at Rehmann in Cleveland.
He said traders won’t want to be holding some investments since U.S. markets are closed Monday, while European ones are open.
Next week will bring a series of economic reports that will test the market, including the Labor Department’s May employment report and readings on manufacturing, consumer spending and housing.
If there are any signs that the U.S. economy is being affected by news of Europe’s problems — for example, if consumers seemed to be spending less — investors are likely to start selling again. And if the jobs report is disappointing, the market is also likely to suffer.
