The Nasdaq rose on Friday, helped by gains in smartphone maker Palm Inc
The Dow was dragged lower by sliding energy shares as oil settled below $70 per barrel. But strength in some financial stocks helped cushion the S&P 500's decline.
The technology-heavy Nasdaq outperformed, helped partly by gains in Palm Inc
Weighing on sentiment, a jump in the savings rate suggested that the debt-burdened U.S. consumer may not drive the economy out of recession as fast as hoped.
Data showed that while consumer spending and income both rose in May as the government stimulus spread through the economy, much of the money was being stored away. Savings jumped to a record annual rate of $768.8 billion, the highest level since record keeping began in 1959.
Robert Stimpson, portfolio manager at Oak Associates in Akron, Ohio, said that while he did not put too much store on the savings data alone, the trend in the United States was toward more saving and less spending.
The U.S. markets are probably going to lag the rest of the world because we have a need to pay down debt, increase our savings rate and be better stewards of our own capital, which might lead to lower consumer spending versus the rest of the world, Stimpson said.
The session was relatively quiet after a busy week that included Federal Reserve Chairman Ben Bernanke's contentious appearance on Capitol Hill and the sale of $104 billion in U.S. Treasury debt.
The Dow Jones industrial average <.DJI> dropped 34.01 points, or 0.40 percent, to 8,438.39. The Standard & Poor's 500 Index <.SPX> fell 1.36 points, or 0.15 percent, to 918.90. But the Nasdaq Composite Index <.IXIC> gained 8.68 points, or 0.47 percent, to 1,838.22.
The S&P 500 has climbed as much as 40 percent since hitting a 12-year closing low in early March. But the rally has stalled in recent weeks as investors look for more signs of an economic recovery. Some analysts are expecting a significant pullback in stock prices over the summer.
Today is a real mixed market without any significant trends, said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut. Generally there is a lack of conviction about what the next direction for the market will be.
A fall in oil prices hit energy bellwethers Chevron Corp
Analysts noted stocks were buffeted by profit taking after Thursday's 2 percent gain, as well as by end-of-quarter window dressing. This can add volatility as portfolio managers sell stocks with big losses and buy some of the quarter's best-performing issues to help improve their returns.
Trading volume was heavy on the New York Stock Exchange, with about 2.35 billion shares changing hands, far above last year's estimated daily average of 1.49 billion, while on Nasdaq, about 3.87 billion shares traded, sharply above last year's daily average of 2.28 billion.
Advancing stocks outnumbered declining ones on the NYSE by 1,833 to 1,170 while on the Nasdaq, there were 1,714 advancers and just 937 decliners.
(Editing by Jan Paschal)