The Dow and the S&P 500 fell on Friday as a jump in the savings rate raised worries the economic recovery will not make much headway if consumers stay frugal, and a slide in crude futures prompted investors to sell some energy shares.
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 socked away. Savings jumped to a record annual rate of $768.8 billion, the highest level since record keeping began in 1959.
For the short run, (the growth in savings) is not encouraging, said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.
Obviously, for the long run, it has been desired for decades that Americans save more. But in the midst of this recovery and the stimulus packages that have been put forward, the hope would be to have them spending the money now, he added.
Energy shares weighed as oil futures fell below $70 a barrel after oil producer Nigeria said it would halt a battle with rebels during a two-month amnesty.
The Dow Jones industrial average <.DJI> fell 47.92 points, or 0.57 percent, to 8,424.48. The Standard & Poor's 500 Index <.SPX> dropped 3.77 points, or 0.41 percent, to 916.49. The Nasdaq Composite Index <.IXIC> rose 2.22 points, or 0.12 percent, to 1,831.74.
Nasdaq was up slightly, helped partly by gains in Palm Inc
Other smartphone makers' shares also rose, including Apple Inc
Weighing down the Dow industrials were 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.
The broad S&P had rallied as much as 40 percent from March's 12-1/2-year closing low, but the run-up has stalled as initial optimism about a stabilizing economy was tempered by worries the recovery could be tepid. The index is up 35.5 percent from the March trough.
(Editing by Jan Paschal)