The stock market closed out a winning week with a narrowly mixed performance Friday after the government reported that Americans' spending rose in April to keep pace with rising costs.
Investors who sent stocks higher for the three preceding sessions turned cautious after the Commerce Department said personal spending and personal income rose 0.2%. The department also said inflation at the consumer level was 0.2%, down from 0.3% in March. Excluding food and energy, April inflation was a tame 0.1%.
The readings were in line with the market's expectations and supported the notion that high commodity costs are not yet causing a sharp pullback in spending or increasing prices for other goods.
Meanwhile, the technology sector got a lift after computer maker Dell and chip maker Marvell Technology Group posted stronger-than-expected quarterly results.
But Wall Street's concerns about the economy and inflation are far from erased despite the stock market's healthy advance this week. Although the government estimated Thursday that first-quarter gross domestic product grew nearly 1%, Americans still face rising costs for necessities such as groceries and gasoline. Furthermore, crude oil remains near record highs -- creating a serious drag on consumer spending.
Investors will get a clearer picture of the economy with reports next week on job growth and manufacturing.
"It is now all about the economy, and I think we're going to get numbers that might be a requiem for the recession forecasters," said Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners. "Not to say the numbers will be great, but not as bad as people might have anticipated. That will give the market a lift."
The Dow Jones industrial average fell 7.90 points Friday, or 0.1%, to 12,638.32.
Broader stock indicators edged higher. The Standard & Poor's 500 index added 2.12 points, or 0.2%, to 1,400.38, and the tech-dominated Nasdaq composite index climbed 14.34 points, or 0.6%, to 2,522.66.
The Russell 2,000 index of smaller companies gained 2.73 points, or 0.4%, to 748.28.
Declining issues outnumbered advancing issues by about 8 to 7 on the New York Stock Exchange. Volume was light.
Stocks finished higher for the holiday-shortened week, recovering partly from the previous week's sharp losses, as the dollar stabilized and oil prices pulled back from record highs.
For the week, the Dow rose 1.3%, the S&P; 500 gained 1.8%, the Nasdaq picked up 3.2% and the Russell 2,000 surged 3.3%.
Yields on government bonds retreated Friday after three days of sharp gains. The 10-year Treasury note's yield, which shot up nearly a quarter of a percentage point earlier in the four-day week, fell to 4.06% from 4.08% late Thursday.
The energy markets, however, still weighed on investors, with oil prices down from record levels but threatening to surge again. Crude oil futures rose 73 cents to $127.35 a barrel in erratic trading in New York.
The dollar fell against other major currencies. Gold gained.
Dell shares jumped $1.25, or 5.7%, to $23.06. The Round Rock, Texas-based company issued a profit report late Thursday that was better than analysts expected, thanks to growth in Asia and strong sales of notebook computers. The results bolstered optimism that foreign economies are helping many U.S. companies weather the weak domestic market.
Marvell Technology soared $3.28, or 23%, to $17.36. The Bermuda company, whose operations are based in Santa Clara, Calif., swung to a larger-than-expected profit.
In other market highlights:
J. Crew Group tumbled $9.64 to $37.27. Two analysts downgraded the apparel retailer after it cut its full-year profit outlook and forecast second-quarter earnings below what analysts had expected.
Tiffany gained $1.29 to $49.03 after the New York-based jewelry retailer posted better-than-expected earnings, citing growth in Asia and Europe.
Stocks rallied overseas. Key indexes climbed 1.5% in Japan, 0.2% in Britain, 0.6% in Germany and 0.8% in France.