NEW YORK — Wall Street sealed the third month of its spring rally with a huge advance. The fourth month looks a little less certain.
Stocks shot higher right before the closing bell Friday after fluctuating on a mix of economic data. Analysts said the surge was the work of short-sellers who had bet that stocks would fall and then had to rush to buy when those bets turned out to be wrong.
A jump in commodities prices, which came on expectations that an improving economy will lift demand for raw materials, also fed the advance.
Even though Wall Street ended May with a big win, it was the shakiest month of the spring rally that started in early March with the first signs that the economy's slide was slowing. When trading resumes Monday, investors are expected to show more of their recent skepticism about how strong the recovery will be once the recession has ended.
Weighing on investors are new worries including climbing interest rates and a weaker dollar. Crude oil prices recently hit a six-month high above $66 a barrel, while the dollar on Friday sank to its lowest level in months against the euro and British pound. Some analysts say these developments are simply the consequence of a recovery in the economy and the financial markets, but others warn these trends could threaten the economy's health in the long-term.
Another more short-term obstacle is General Motors' expected bankruptcy filing on Monday, the automaker's restructuring deadline. The market has been factoring in the likelihood of a GM bankruptcy for months, but investors still are unsure what the fallout might be for auto suppliers and other companies.
"Technically, the market is looking quite good," said Peter Cardillo, chief market economist at the brokerage house Avalon Partners. "Although, I suspect we'll probably stay within this trading range for another couple of weeks."
The Dow Jones industrial average rose 96.53, or 1.2 percent, to 8,500.33. The Standard & Poor's 500 gained 12.31, or 1.4 percent, to 919.14, while the Nasdaq rose 22.54, or 1.3 percent, to 1,774.33.
All three indexes rose sharply for the week and, more important, had their third straight winning month. The Dow is up 4.1 percent for May, the S&P 500 index is up 5.3 percent, and the Nasdaq is up 3.3 percent. The Russell 2000 index of smaller companies rose 9.37, or 1.9percent, to 501.58.
The economic data Friday prevented the market from finding a direction for much of the day. Commerce Department's report on first-quarter gross domestic product showed the economy contracted at an annual rate of 5.7percent, a bit more than analysts' forecasts. Also, personal spending was revised lower. But the drop in GDP was smaller than the 6.1 percent estimated last month, and the report showed corporate profits rising.
The report "points to recovery," Cardillo said. "And what you have here is a market that continues to look for recovery."
Overseas, Japan's Nikkei stock average rose 0.8 percent. Britain's FTSE 100 rose 0.7 percent, Germany's DAX index rose 0.2 percent, and France's CAC-40 rose 0.4 percent.