Stocks mixed as savings rate jumps

Associated Press

Stocks capped a choppy week of trading with a mixed performance Friday. Two of the three major indexes ended down for the day and the week.

The Dow Jones industrial average slid 34.01 points, or 0.4%, to 8,438.39. The Standard & Poor's 500 index fell 1.36 points, or 0.2%, to 918.90. But the Nasdaq composite index rose 8.68 points, or 0.5%, to 1,838.22.

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

Investors showed concern Friday about a Commerce Department report indicating that Americans' savings rate soared to 6.9%, a 15-year high, while consumer spending rose by a modest 0.3%.

The jump reflected at least in part a one-time jump in income tied to stimulus payments for retirees and others. But if the trend continues, it could hurt the economy in the short term.

Phil Orlando, chief equity market strategist at Federated Investors, said he expected the savings rate to eventually hit 10% before it eases. The rate was 5.6% in April and less than 1% from 2005 through 2007.

"If people ramp up savings that aggressively, that is going to result in less [economic] recovery than ordinarily would be the case," Orlando said.

The University of Michigan reported a rise in consumer sentiment in June, better than the flat reading expected by analysts. But the news couldn't trigger a rally.

Economic data next week, particularly the government's monthly employment report Thursday, could dominate a week shortened by the Fourth of July holiday Friday. Reports also are due on home sales and manufacturing.

The technology-dominated Nasdaq did better than the other major indexes thanks in large part to Palm. The smart-phone maker posted a narrower loss for its latest quarter than analysts expected. Its stock surged 16%.

In other market highlights:

* Advancing stocks outnumbered declining stocks 3 to 2 on the New York Stock Exchange. Volume was heavy because of the annual reconstitution of the Russell 3,000 index, which forced funds that track the index to buy and sell hundreds of stocks to match the new makeup of the indexes.

* Government bond yields fell again. The yield on the benchmark 10-year Treasury note slipped to 3.5% from 3.54% late Thursday.

* 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.

* Overseas, key stock indexes fell 0.3% in Britain, 0.5% in Germany and 1.1% in France. Japanese shares rose 0.8%.

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