US Stocks End Mixed on Consumer Spending Data

Stocks finished mostly lower riday as investors worried that consumFers are saving money rather than spending it, a dynamic that could prolong the recession, which is now well into its second year.

Today’s Markets

The Dow Jones Industrial Average fell 34.01 points, or 0.40%, to 8,438.09, the Standard & Poor’s 500 fell 2.45, or 0.27%, to 917.81, the Nasdaq Composite rose 8.68, or 0.47%, to 1,838.22. Volume was light. Just over 1 billion shares traded on the New York Stock Exchange.

The Dow Jones industrial average closed the week down 101.34, or 1.2 percent, at 8,438.39. The Standard & Poor's 500 index fell 2.33, 0.3 percent, to 918.90. The Nasdaq composite index rose 10.75, or 0.6 percent, to 1,838.22.

The Commerce Department reported that personal spending, incomes and savings all rose in May. The troubling part to investors, though, was that the savings rate soared to 6.9%, a 15-year high, while spending rose by a modest 0.3%. It was a volatile week for the stock market. After four straight days of losses, the Dow Jones industrial average rebounded by nearly 200 points, or 2.1% , on Thursday. A day later, traders skimmed some profits from that jump ahead of the weekend, analysts said.

The trend suggests consumers are being very careful with their money. That's good for the individual, but not great for the overall economy in the short-term.

But some market watchers predicted that technical factors would prevent a broad selloff, and their predictions proved right.

Specifically, explained Marc Pado, U.S. market strategist for Cantor Fitzgerald, as the end of the second quarter approaches, many fund managers will seek to gain positions in stocks that have been performing well during the recent stock market rally. That will provide a foundation that will keep stocks from collapsing. “They’re running out of time. They’ve got to show they’re putting their clients’ money to work,” said Pado.

Data Dump The markets, after opening lower, responded positively to some welcome news: the University of Michigan reported a rise in consumer sentiment in June. Analysts had anticipated a flat reading. Government bond prices rose modestly. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.51 percent from 3.54 percent late Thursday.