updated 6/2/2008 9:11:44 AM ET 2008-06-02T13:11:44

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.

Major Market Indices

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 from 4.08 percent late 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 volume came to 1.41 billion shares.

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.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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