Stocks finish mixed on news of savings

NEW YORK - Consumers are saving more than they are spending, and that has investors worried.

Stocks finished mixed yesterday after a choppy week of trading after the Commerce Department reported that personal spending, incomes and savings all rose in May. What troubled investors was that the savings rate soared to 6.9 percent, a 15-year high, while spending rose by a modest 0.3 percent.

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.

Phil Orlando, chief equity market strategist at Federated Investors, said he expects the savings rate to eventually hit 10 percent before it eases. The savings rate had been 5.6 percent in April, and annual savings rates were below 1 percent from 2005 through 2007.

After sliding early in the week, the Dow Jones industrial average rebounded 2.1 percent on Thursday. But traders appeared eager to take some profits from that jump ahead of the weekend, analysts said.

Investors have been worrying that a 35.8 percent rally in the Standard & Poor's 500 index from a 12-year low on March 9 is overdone, because an economic recovery may be further out than many had earlier hoped. But with the end of the quarter on Tuesday, some portfolio managers could be eager to take the market higher to burnish their numbers for the April-June period.

The Dow fell 34.01, or 0.4 percent, yesterday to 8,438.39. The S&P 500 index fell 1.36, or 0.2 percent, to 918.90. The Nasdaq composite index rose 8.68, or 0.5 percent, to 1,838.22.

For the week, the Dow lost 101 points, or 1.2 percent. The S&P 500 index fell 0.3 percent and the Nasdaq rose 0.6 percent. The Dow is down 3.9 percent for the year, while the S&P 500 and Nasdaq are higher.

The University of Michigan reported a rise in consumer sentiment in June, better than the flat reading expected by analysts. But even that report could not trigger a rally.

The technology-dominated Nasdaq did better than the other major indexes, though, thanks in large part to Palm Inc. The smartphone maker posted a narrower loss for its fiscal fourth quarter than analysts expected. The stock rose $2.20, or 15.7 percent, to $16.22.

The Russell 2000 index of smaller companies rose 4.04, or 0.8 percent, to 513.22.

Advancing stocks outnumbered declining stocks 3-to-2 on the New York Stock Exchange, where consolidated volume came to 5.1 billion, up from 4.9 billion logged Thursday. Volume was heavy because of the annual reconstitution of the Russell 3000 index, which forced investors to buy and sell hundreds of stocks to match the new makeup of the indexes.

Crude oil fell $1.07 to settle at $69.16 a barrel on the New York Mercantile Exchange.

The dollar was mixed against other major currencies. Gold prices rose.