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Posted: May 31, 2013 11:31 a.m.

Stocks edge lower after Americans cut spending

 

NEW YORK (AP) — Stocks edged lower in early trading on Wall Street Friday after the government reported that Americans cut back on spending last month for the first time in almost a year.

Consumer spending fell 0.2 percent in April, the first decline since last May, the Commerce Department said Friday. That follows a 0.1 percent increase in March and a 0.8 percent jump in February.

The drop was a disappointment for investors hoping that increasingly confident consumers would step up their spending, which would contribute to U.S. economic growth.

The Dow Jones industrial average was down 36 points to 15,291 as of 10:17 a.m., a loss of 0.2 percent.

The Standard & Poor's 500 index fell five points, or 0.2 percent, to 1,649. The Nasdaq composite fell five points to 3,485, or 0.2 percent.

The yield on the 10-year Treasury note rose to 2.16 percent from 2.12 percent late Thursday. The yield has risen by half a percentage point since the start of the month. On Tuesday it climbed to 2.17 percent, the highest level in more than two years.

Rates have risen on concern that the Federal Reserve is considering easing back on its purchases of $85 billion in bonds every month.

The sharp rise in Treasury yields could be trouble for the market if it continues unabated, said David Bianco, chief U.S. equity strategist at Deutsche Bank. The yields on Treasury notes are widely used benchmarks for setting interest on many kinds of loans to consumers and businesses. If they rise quickly, lending rates on mortgages and many other kinds of loans would rise too, holding back the economy.

"I'm not bearish, but I'm a little bit cautious," Bianco said.

Despite the adage of "Sell in May and go away," stocks have had a good month.

The Dow is up 3.3 percent this month and is on track to record its first gain in May since 2009. The S&P 500 index has risen by 3.5 percent.

The Standard & Poor's is also heading for its seventh straight monthly gain, the longest winning streak since 2009.

In commodities trading, oil fell 89 cents, or 0.9 percent, to $92.72 a barrel, close to its lowest in a month, after OPEC oil ministers said they would keep their output targets steady. Gold fell $16.50 to $1,395 an ounce, a decline of 1.2 percent.

Among stocks making big moves:

Lions Gate Entertainment rose $1.04, or 3.7 percent, to $29.05 after it reported net income that topped Wall Street's expectations as it benefited from home video sales of the finale to its hit franchise "Twilight."

Palo Alto Networks fell $6.26, or 11.4 percent, to $48.18 after the network security company posted a quarterly loss and predicted lower profit and revenue in the current quarter than analysts were expecting.

OmniVision Technologies, a maker of mobile camera sensors, jumped $3.09, or 20 percent, to $18.57. The company reported that its net income doubled in its fourth fiscal quarter as revenue rose sharply.

 
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