Why the S&P 500 Was Flat Last Week

Investors have done well this month. Despite the "sell in May and go away" cliche, those who have hung in there have seen the S&P 500 (^GSPC -0.88%) increase by more than 4% since the month began. This most recent week, in fact, was the only five-day period in which stocks declined.

By all appearances, you'd be excused for wondering why stocks didn't continue their upward climb. On Wednesday, the National Association of Realtors released data showing that existing-home sales increased last month by 9.7% on a year-over-year basis.

This upbeat assessment was confirmed on the same day by the quarterly earnings of Toll Brothers (TOL -0.84%), the nation's largest luxury-home builder. The company's fiscal second-quarter results showed that its net signed contracts rose by an impressive 36% compared with the same three months in 2012.

And Thursday was the bearer of more good news. Early in the morning, the Labor Department noted that jobless claims in the previous week had fallen to 340,000, down from 363,000 the previous week. And on the same day, the Commerce Department said (link opens PDF) that new home sales edged up last month to the second highest level since the financial crisis.

So why again did the market go down?

The impetus for the market's stagnant performance lay at the feet of the Federal Reserve. On Wednesday, the chairman of the Fed, Ben Bernanke, testified before Congress about the possibility that the central bank could begin to taper back on its monthly bond purchases at one of its "next few meetings." He tempered this statement, however, be noting that monetary policymakers would do so only if there's evidence of "real and sustainable progress in the labor-market outlook."

Bernanke's testimony was subsequently seconded by the release of the minutes from the bank's most recent monetary policy committee meeting. Click here to read more about this.

In terms of individual stocks, the top-performing component on the S&P 500 last week was Hewlett-Packard (HPQ 0.69%), which saw its shares rise by nearly 14% throughout the week. Most of the gain came on Thursday, a day after the personal-computer maker announced better-than-expected quarterly earnings. As my colleague Dan Dzombak discussed at the time, while HP missed estimates on the top line, its bottom-line beat was clearly enough to satisfy investors.

Meanwhile, the worst-performing stock on the index was Dean Foods (DF), which lost more than half of its value. This otherwise disturbing performance followed the company's spinoff of its organic-foods division, WhiteWave Foods (WWAV). As fellow Fool Rich Duprey covered here, each Dean Foods shareholder received 0.25544448 shares of WhiteWave class A stock and 0.36380189 shares of its class B stock for every share of Dean Foods.