US stocks mixed in quiet pre-holiday trading

A strong consumer spending and earnings report failed to fend off the pre-holiday doldrums on Wall Street today as stocks finished an uninspired session mixed. However, the major indexes managed a week of solid gains for the first time in over a month.

Profit-taking following the previous session’s rally kept prices lower as investors took a rare chance to lock in gains. Volume was low in advance of the Memorial Day holiday as well. In addition, some investors were looking forward to next Friday’s key employment figures to further bolster their bullishness.

“We’ve made some good progress in the past few days, but the market’s tired,” said Russ Koesterich, US equity strategist at State Street Corp. in Boston. “The market was oversold coming into mid-May. Investors have been nibbling, but we haven’t seen the kind of volume that would suggest that the institutions are really coming in.”

The Dow Jones industrial average fell 16.75, or 0.2%, to 10,188.45. The index had posted a gain of 95.31 on Thursday.

Broader stock indicators were mixed. The Standard & Poor’s 500 index slipped 0.64, or 0.1%, to 1,120.64, and the Nasdaq composite index was up 2.24, or 0.1%, at 1,986.74.

For the week, the Dow gained 221.71, or 2.2%, the S&P rose 27.08, or 2.5%, and the Nasdaq was up 74.65, or 3.9%. It was the first positive week for the Dow and S&P after four straight weeks of losses, while the Nasdaq posted its second straight week of gains.

The past week also helped the markets turn finish the month on a positive note, leading some analysts to believe that the markets have finally reached their short-term lows and will move higher in June. For the month, the S&P rose 1.2% and the Nasdaq was up 3.5%, while the Dow was down just 0.4%.

For the year so far, the S&P was 0.8% higher, while the Dow was down 2.5% and the Nasdaq was off 0.8%.

The Commerce Department reported that consumer spending rose 0.3% in April, another solid gain after an 0.5% rise in March.

Even more encouraging, personal income rose by 0.6% in April, following a 0.4% increase in March – a sign that consumers will have more to spend in the future and can absorb some of the inflationary effects in the market, such as high oil prices.

Shares of semiconductor makers rose across the board after Novellus Systems Inc, a maker of chip manufacturing equipment, raised its earnings and revenue targets for the second quarter.

In a mid-quarter conference call, executives were bullish about their business prospects and said conditions were impoving steadily. Novellus was up 1.91 at 33.29, Intel Corp. rose 10 cents to 28.55, and National Semiconductor Corp. gained 71 cents to 21.67.

Advancing issues outnumbered declining ones by about 3 to 2 on the New York Stock Exchange, where volume came to 1.17 billion shares, well below Thursday’s 1.44 billion.

The Russell 2000 index of smaller companies was down 0.25, or 0.04%, at 568.31.