US stocks end mixed

Wall Street slogged through an uneven trading session today, 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% in July, incomes rose just 0.3%. People spent more than they earned for just the second time in 46 years, and the US nation’s savings rate fell to the lowest level yet recorded.

The US 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 did not 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%, to 10,459.63 after posting a 68-point gain on Wednesday.

Broader stock indicators were narrowly mixed. The Standard & Poor’s 500 index rose 1.26, or 0.1%, to 1,221.59, and the Nasdaq composite index dropped 4.19, or 0.19%, 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% from 4.01% late Wednesday. The dollar fell against most major currencies, while gold prices rose.

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

In other economic news, the Labour 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.

While the economic data was troubling, the high trading volume showed investors were ready to find places to invest. However, their ability to make decisions was hamstrung by the debate over Katrina’s economic impact. Oil prices, of course, have been surging, but there may be economic positives to come from the disaster as money is spent to rebuild.

“You’ve got a push-pull between tragedy and the good that can come out of it for the markets,” said Jay Suskind, head trader at Ryan Beck & Co. “You’ve got to rebuild, and you’re going to put money and resources into that and create jobs.”

Leading the retail sales reports, Wal-Mart Stores reported a 3.3% increase in sales for August, just missing Wall Street’s 3.4% forecast. The gains, however, were positive considering the record petrol prices, which hit Wal-Mart’s lower-income customers disproportionately. Dow component Wal-Mart edged 4 cents higher to 45.

Bargain hunters sought out wholesalers and discounters in August, leading to strong sales, though investors weren’t rewarding those stocks due to concerns about September’s results. Target, which saw a 6.3% jump in August sales, dropped 97 cents to 52.78, while Costco Wholesale fell 22 cents to 43.18 and BJ’s Wholesale Club slid 85 cents to 27.70 even after both companies beat Wall Street’s sales estimates.

In other news, drug maker Novartis AG added 44 cents to 49.19 after announcing a 4.5 billion (-3.6 billion) cash takeover bid for Chiron Corp, the US vaccine maker. Novartis already owns 42.2% for Chiron and said it will pay 40 per share for the rest of the company. Chiron surged 18%, or 6.49, to 42.93.

Advancing issues outnumbered decliners by nearly 5 to 3 on the New York Stock Exchange, where volume came to 1.71 billion shares, compared with 1.8 billion traded at the same point on Wednesday.

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