Stocks Up Slightly on Mixed News

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Wall Street investors reacted cautiously today to a mixed bag of economic news and turbulent trading in energy markets, where crude oil futures fell below $50 a barrel before rebounding.

The Dow Jones industrial average ended at 10,054.39, up 26.92. The Nasdaq, S&P 500 and other major financial indexes also posted modest increases.

Investors were buoyed in part by the continued retreat of crude oil futures from record high territory. At one point, crude oil futures were trading below $50 a barrel, but ended the day at $50.13, down $1.63 a barrel on the New York Mercantile Exchange.

On the economic front, the Commerce Department today said that consumer spending and personal income both rose in September. Personal income edged up 0.2% after an 0.3% rise in August.

Meanwhile, consumer spending, the most important element in economic growth, posted a 0.6% gain in September after declining 0.1% in August. The growth in spending was primarily the result of a jump in car and truck purchases as automakers aggressively turned to rebates and other promotions to stimulate sales.

While the increases in spending and personal income were about in line with forecasts, many analysts expressed concern about the outlook for consumer expenditures because of the recent run up in energy prices and the lack of additional tax cuts.

"With energy prices rising and payroll gains now modest, we expect another small income gain in [the fourth quarter], which makes us very nervous about consumers' spending," said Ian Shepherdson, chief U.S. economist, in a report for the consulting firm High Frequency Economics.

In a separate report, U.S. factory activity continued to expand last month, but at a lower rate than many analysts had expected. The Institute for Supply Management's index of manufacturing activity in October came in at 56.8, down 1.7 from the previous month. While any reading above 50 signals an expansion, the index has declined for three consecutive months.

"Strong growth continues in the sector, but at a slower rate than in September," said ISM group director Norbert J. Ore in a statement. "New orders and production remain strong, and employment continues to expand. However, energy prices and commodity price inflation are major concerns for manufacturing buyers."

In a separate report, the Commerce Department said that construction spending in September was estimated at a seasonally adjusted annual rate of $1.014 trillion — virtually unchanged from the rate in August.

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