Consumers spending
more than they have

NEW YORK » Wall Street slogged through an uneven session yesterday, 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 yesterday, with a barrel of light crude settling at $69.47, up 53 cents, on the New York Mercantile Exchange.

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.