Higher savings rate hurting sales

NEW YORK – 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.

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.

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 101.34 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.