(MoneyWatch) While everyone was hyper-focused on Facebook (FB) -- the stock closed at $38.23 after its first day of trading -- the crowd may have missed the fact that U.S. stocks have been having a rotten May. Through the first four months of the year, things were going smoothly, with the S&P 500 up 11.6 percent and the NASDAQ jumping 17.8 percent. The trouble started with the weak April U.S. jobs report and got worse after the Greek elections threw that country, and the entire eurozone, into limbo. As a result, investors have been steadily selling stocks, slicing year-to-date gains by 75 percent.
Investors are now on pins and needles, awaiting the outcome of a second Greek election in June and talking candidly about the country leaving the eurozone, a so-called "Grexit". Just talk of a Greek exit is causing a massive loss of confidence in other peripheral economies, like Spain, Portugal and Italy. Without coordinated European action to build a firewall around these countries to prevent a run on their banks, these nations remain at significant risk. Contagion, instability and unrest in Europe could affect the global banking system, including U.S. banks; U.S. exports and the U.S. economy; and of course, the stock market.
Meanwhile, back in the U.S., this week's data on housing could confirm that a bottoming process is now occurring across the country. Of course, that doesn't mean prices are about to rise, but after a bubble and a bust, it would be great news is prices stopped falling.
The stock market's slow grind lower continued last week, as each index had its worst week since last fall. In the "we like good news too" category, crude oil tumbled nearly 5 percent last week and has dropped almost 13 percent over the last three weeks. The national average price for a gallon of regular gas was $3.70 and likely headed lower, just in time for the unofficial kick-off of the summer driving season.
-- DJIA: 12,369, down 3.5% on week, up 1.2% on year (down 6.5% over the last three weeks)
-- S&P 500: 1,295, down 4.3% on week, up 3% on year (down 7.7%, over the last three weeks)
-- NASDAQ: 2,778, down 5.3%, up 6.7% on year (down 9.5%, over the last three weeks)
-- June Crude Oil: $91.48, down 4.8% on week (down 12.8% over last three weeks)
-- June Gold: $1591.90, up 0.5% on the week (down 7.4% YTD)
-- AAA National Average Price for Gallon of Regular Gas: $3.70
THE WEEK AHEAD:
8:30 Chicago manufacturing index
Senate Banking Committee discusses derivatives reform
10:00 Existing home sales
10:00 Richmond Fed manufacturing index
European heads of state hold informal summit
7:00 MBA mortgage purchase applications index
10:00 New home sales
10:00 FHFA home price index
8:30 Weekly jobless claims
8:30 Durable goods orders
9:55 Consumer sentiment
2:00 U.S. bond market closes ahead of Memorial Day weekend