NEW YORK (AP) - Wall Street 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 three straight sessions turned cautious
after the Commerce Department said personal spending rose 0.2 percent last month
and personal income rose 0.2 percent. The department also said inflation at the
personal spending level, after stripping out food and energy costs, ticked up in
April by a tame 0.1 percent.
The readings were in line with the market's expectations, and supported the
notion that high commodities costs are not yet causing a sharp pullback in
spending or lifting prices for other goods. Meanwhile, the technology sector got
a lift after computer maker Dell Inc. and chip maker Marvell Technology Group
Ltd. 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 gain this week. Although the
government estimated Thursday that first-quarter gross domestic product grew by
nearly 1 percent, Americans still face rising costs for necessities such as
groceries and gasoline. Furthermore, crude oil remains near record highs -- a
serious drag on consumer spending which accounts for more than two-thirds of the
U.S. economy.
Investors will get a clearer picture next week when a number of key economic
reports will be released. Analysts believe strong data on job growth and
manufacturing will boost stocks -- or, if the reports are disappointing, deliver
a setback to the markets.
"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."
He said some investors were adjusting their positions Friday ahead of the
data. The Dow Jones industrial average fell 7.90, or 0.06 percent, to 12,638.32.
Broader stock indicators edged higher. The Standard & Poor's 500 index added
2.12, or 0.15 percent, to 1,400.38, and the Nasdaq composite index rose 14.34,
or 0.57 percent, to 2,522.66.
All three indexes finished higher for the week, recovering from the previous
week's sharp losses. The dollar stabilized and oil prices pulled back from
record highs during the past four sessions, giving investors some relief as they
parsed data suggesting that the economy is weak but not technically in
recession.
The Dow rose 1.27 percent, the S&P 500 gained 1.78 percent and the Nasdaq
picked up 3.19 percent.
Government bonds edged up Friday. The yield on the 10-year Treasury note,
which moves opposite its price, fell to 4.06 percent in late trading from 4.08
percent on Thursday.
The energy markets continued to weigh on investors, however, with oil prices
down from record levels but threatening to surge again. Crude oil futures
settled up 73 cents at $127.35 a barrel in erratic trading on the New York
Mercantile Exchange.
"We've hit a level where you're starting to see demand destruction," said
John Massey, portfolio manager at AIG SunAmerica Asset Management.
The dollar fell against other major currencies, while gold prices rose.
Wall Street will look for signs of how rising inflation is affecting the
economy in several reports due next week. The Institute for Supply Management
will release an index of conditions in the manufacturing sector on Monday and
its services sector report on Wednesday.
The Labor Department on Friday will release its May employment report, one
of the most closely-watched indicators of economic health.
In corporate news, the technology-dominated Nasdaq got a boost after Dell,
the world's second-largest seller of personal computers, issued a profit report
late Thursday that was stronger than analysts expected due to growth in Asia and
robust sales of notebook computers.
Dell shares jumped $1.25, or 5.7 percent, to $23.06, and injected some
optimism into Wall Street that foreign economies are helping many companies
weather the weak U.S. market.
Marvell Technology swung to a larger-than-expected profit in the quarter
ended May 3, and its revenue also beat analyst forecasts. Shares rose $3.28, or
23.3 percent, to $17.36.
The Russell 2000 index of smaller companies rose 2.73, or 0.37 percent, to
748.28.
Advancing issues outnumbered decliners by about 8 to 7 on the New York Stock
Exchange, where consolidated volume came to 3.72 billion shares, compared to
3.81 billion shares on Thursday.
Overseas, Japan's Nikkei stock average closed up 1.52 percent. Britain's
FTSE 100 fell 0.24 percent, Germany's DAX index advanced 0.59 percent, and
France's CAC-40 rose 0.77 percent.
The Dow Jones industrial average ended the week up 158.69, or 1.27 percent,
at 12,638.32. The Standard & Poor's 500 index finished up 24.45, or 1.78
percent, at 1,400.38. The Nasdaq composite index ended the week up 77.99, or
3.19 percent, at 2,522.66.
The Russell 2000 index finished the week up 24.18, or 3.34 percent, at
748.28.
The Dow Jones Wilshire 5000 Composite Index -- a free-float weighted index
that measures 5,000 U.S. based companies -- ended Friday at 14,260.76, up 306.28
points, or 2.19 percent, for the week. A year ago, the index was at 15,441.30.
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