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Stocks mixed as concerns intensify

Associated Press

Wall Street slogged through an uneven session Thursday, finishing mixed as investors grappled with troubling consumer spending patterns, slower growth from the manufacturing sector and the latest news of Hurricane Katrina’s damage.

Investors saw a disturbing trend in the Commerce Department’s consumer income and spending report. While consumer spending rose by a solid 1 percent in July, incomes rose just 0.3 percent. People spent more than they earned for just the second time in 46 years, and the nation’s savings rate fell to the lowest level ever recorded.

The nation’s manufacturing sector also saw an unexpected slowdown, with the Institute for Supply Management’s manufacturing index falling to 53.6 in August from 56.6 the previous month.

Yet the losses were minimal, and volume was extremely heavy for a market still struggling through Wall Street’s summer doldrums — a sign that investors were still willing to buy stocks, even if they didn’t quite know where to put their money, as reflected in volatile prices.

“I think the market’s sending a very clear signal that it wants to move higher,” said Ken Tower, chief market strategist for Schwab’s CyberTrader. “What’s happening in front of us right now is discouraging, but the market’s telling us that these will be short-term disruptions.”

The Dow Jones industrial average fell 21.97, or 0.21 percent, to 10,459.63 after posting a 68-point gain Wednesday.

Broader stock indicators were narrowly mixed. The Standard & Poor’s 500 index rose 1.26, or 0.1 percent, to 1,221.59, and the Nasdaq composite index dropped 4.19, or 0.19 percent, to 2,147.90.

Bonds fell slightly after the previous session’s rally, with the yield on the 10-year Treasury note rising to 4.03 percent from 4.01 percent late Wednesday. The dollar fell against most major currencies, while gold prices rose.

Much of the worrisome disparity between income and spending can be blamed on record gasoline prices fueled by the sharp rise in crude oil futures this summer. Crude futures rose once again Thursday, with a barrel of light crude settling at $69.47, up 53 cents, on the New York Mercantile Exchange.

In other economic news, the Labor Department said first-time jobless claims rose to a seven-week high of 320,000 last week, up 3,000 from the previous week. Unemployment claims are expected to rise significantly in the coming weeks due to layoffs spurred by Katrina.

Advancing issues outnumbered decliners by nearly 5 to 3 on the New York Stock Exchange, where preliminary consolidated volume came to 2.24 billion shares, compared with 2.36 billion traded at the same point on Wednesday.

The Russell 2000 index of smaller companies rose 1.95, or 0.29 percent, to 668.46.

Overseas, Japan’s Nikkei stock average rose 0.75 percent. In Europe, Britain’s FTSE 100 closed up 0.6 percent, France’s CAC-40 climbed 0.56 percent for the session, and Germany’s DAX index gained 0.27 percent.

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