Stocks mixed as savings rise

First Posted:

The Associated Press

NEW YORK —
Stocks ended mixed Friday 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 more modest 0.3 percent.
The trend suggests consumers are being extremely 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.
“If people ramp up savings that aggressively, that is going to result in less GDP recovery than ordinarily would be the case,” Orlando said.
Gross domestic product dropped at an annual rate of 5.5 percent in the first quarter, the government reported earlier this week. As the first half of 2009 ends, investors are growing more anxious about whether the economy can bounce back later this year.
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 up.
The University of Michigan reported a rise in consumer sentiment in June. 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.
Crude oil fell $1.07 to settle at $69.16 a barrel on the New York Mercantile Exchange.