May was definitely an odd month. At the beginning, there was a brief rally in the stock market as the news of Osama bin Laden’s death was announced. Unfortunately, that news dimmed in comparison to the fact that the US was rapidly approaching its debt ceiling without a Congressional consensus regarding a solution. In the meantime, commodity prices plummeted. Although virtually every category saw a drop, silver was hit the worst with prices decreasing by more than 25 percent.

All Three Indexes were Slightly Down for May 2011

Although the last day of the market showed increases across the board, the three major indexes were slightly down for the month of May. The Dow dropped from April’s 12,810 ending figure to 12,569 for May. In a similar fashion, the NASDAQ finished at 2,835 for May compared to 2,873 for April while the S&P ended at 1,345 for the month, dropping from April’s 1,363 closing figure. Even with this slight dip, the market has recovered approximately 92% of its worth since the low of March 9, 2009.

The Commodity Price Drop

Generally, commodities increase in price as the market drops, but this wasn’t the case for May. In April, oil finished at $113.66, natural gas at $4.68, and gold at $1,561. For May, the same commodities came in at $103.14, $4.65, and $1,535. At least the pump prices are also dropping.

The US Debt Issue

As previously mentioned, the high debt level of the US government has been on the minds of investors over the previous few months. News reports at the end of May continued to discuss the ongoing debates as Congress tries to decide whether it should raise the debt ceiling without spending cuts. As of May 17, the $14,294 trillion debt ceiling had been exceeded. Without an agreement between Congress and the White House by the August 2nd deadline, the country will be officially in default on the associated loans. However, Moody Investor Services, a credit rating agency, believes that the US credit rating could be downgraded from the current “AAA” grade to a lower level as early as July if something doesn’t change in the meantime.

Although the following developments did not have the anticipated effect on the stock market, they do offer some good news for May. Consumer sentiment jumped from 69.8 to 74.3, personal consumption increased by 0.4 percent, and personal income rose by 0.4 percent.

May’s Dividend Paying Stocks

Although the overall Standard & Poor’s 500 stock index was slightly down for the month, the Dividend Aristocrats were up as a group. For May, total returns increased 0.27% for the month, 3.76% for the quarter, and 7.9% for the year. The price returns showed the first drop in a long time but were still up for the quarter and the year. These numbers were -.03%, 3.35%, and 6.78%. If you look at the extended performance of the dividend-paying stocks, total returns were up 26.04% for the past 12 months, 8.69% for the last three years, and 6.76% for the last five years. In the price-returns category, the same numbers were 22.44%, 5.18%, and 3.6%.

The following stocks were the best performers as of the end of May:

• Cintas Corp from the Industrials sector trading at $32.85
• Bard, C.R. Inc from the Health Care sector trading at $111.78
• Ecolab Inc from the Materials sector trading at $54.88
• Johnson & Johnson from the Health Care sector trading at $67.29
• Becton, Dickinson & Co from the Health Care sector trading at $87.55
• Sigma-Aldrich Corp from the Materials sector trading at $70.29
• Leggett and Platt from the Consumer Discretionary sector trading at $25.83
• Chubb Corp from the Financials sector trading at $65.59
• PepsiCo Inc from the Consumer Staples sector trading at $71.12
• McGraw-Hill Cos Inc from the Consumer Discretionary sector trading at $42.47

Industrial Sectors Were Down for May 2011

Six of the 10 industrial sectors were down for the past month. The Energy sector was the worst performer with a 4.61% drop for the month while the biggest gain was seen in Consumer Staples with a modest 2.37% increase. Overall, the entire commodities market dropped by 1.35%. However, the long-term numbers are still encouraging. Year-to-date, this investment category has increased by 6.96%, and the numbers for the past two years show a 46.35% gain. The following list provides the performance rates by sector for May 2011:

• Energy sector, down by 4.61% for May, up by 43.95% for the year
• Materials sector, down by 2.92% for May, up by 33.08% for the year
• Industrial sector, down by 3.00% for May, up by 26.53% for the year
• Consumer Discretionary Spending sector down by 0.46% for May, up by 25.22% for the year
• Consumer Staples sector, up by 2.37% for May, up by 22.91% for the year
• Health Care sector, up by 2.15% for May, up by 25.00% for the year
• Financials sector, down by 3.35% for April, up by 7.94% for the year
• Information Technology sector, down by 1.81% for May, up by 19.97% for the year
• Telecommunication sector, up by 1.64% for May l, up by 33.09% for the year
• Utilities sector, up by 1.62% for May up by 17.89% for the year
• Total, down by 1.35% for May, up by 23.48% for the year