NEW YORK (AP) — Consumers are saving more than they’re spending, and that has investors worried.
Stocks capped a choppy week of trading with a mixed finish 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 modest 0.3 percent.
The trend suggests consumers are being very careful with their money. That’s good for the individual, but not great in the short term for the overall economy, which relies heavily on consumer spending for growth.
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.
“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.
That uncertainty, bolstered by a mix of promising and worrisome data, led to a bumpy week in the stock market. After sliding early in the week, the Dow Jones industrial average rebounded by 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.
Economic data next week, particularly the government’s monthly employment report on Thursday, could dominate a week shortened by the Independence Day holiday on Friday. Reports are also due on home sales and manufacturing.
The Dow fell 34.01, or 0.4 percent, on Friday 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 up.
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 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.
Government bond prices edged higher. The yield on the benchmark 10-year Treasury note, which moves opposite its price, slipped to 3.53 percent from 3.54 percent late Thursday.
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.
Overseas, Britain’s FTSE 100 fell 0.3 percent, Germany’s DAX index fell 0.5 percent, and France’s CAC-40 fell 1.1 percent. Japan’s Nikkei stock average rose 0.8 percent.
The Dow Jones industrial average closed the week down 101.34, or 1.2 percent, at 8,438.39. The Standard & Poor’s 500 index fell 2.33, 0.3 percent, to 918.90. The Nasdaq composite index rose 10.75, or 0.6 percent, to 1,838.22.
The Russell 2000 index, which tracks the performance of small company stocks, rose 0.5, or 0.1 percent, for the week to 513.22.
The Dow Jones U.S. Total Stock Market Index — which measures nearly all U.S.-based companies — ended at 9,417.51, down 10.99, or 0.1 percent, for the week. A year ago, the index was at 13,125.12.

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