US stocks closed modestly down despite solid data as the market continues to exhibit risk aversion.

The S&P 500 Index closed down 10.88 points, or 0.81 percent, to end at 1,337.77.  The Dow Jones Industrial Average lost 100.17 points, or 0.79 percent, to close at 12,595.75.  The Nasdaq Composite fell 1.21 percent.

Headline coming out of Friday wasn't particularly bearish - in fact, French and German GDP data came in stronger than expected and US inflation data met expectations.

Nevertheless, US stocks continued their downward trend for May, a historically lackluster month for stocks. 

Sentiment remains negative mostly because the risk-on trade had gotten ahead of itself in April and the last two weeks of March.  Now, the market is correcting itself.

There were two factors that triggered the correction: the ECB's disappointment of interest rate hawks, which unwound the risk-on trade in the currencies market, and the raising of margin requirements for gold and oil futures, which unwound the risk-on trade in the commodities market.

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