Stocks waver following week's big gains

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NEW YORK – Wall Street wavered Friday, as investors tried to decide whether to extend or lock in the week's big gains after a report that showed worried consumers are cutting back on their spending.

The Commerce Department said personal spending fell by 0.3 percent last month, as expected, the biggest decline since June 2004. Combined with flat readings in both July and August, it led to the worst quarterly performance in 28 years.

But Wall Street's reaction to the data was far from frantic. Given this week's readings on flagging consumer confidence and shrinking gross domestic product, investors have largely discounted the fact that Americans are fearful about the economy and their shrinking investment portfolios.

Some profit-taking was to be expected with the major indexes up 8 percent for the week, but this October has been the worst month for the market in 21 years — and many stocks are looking like bargains right now. Heading into the session, the Standard & Poor's 500 index was down 18.2 percent for October; the index fell 21.8 percent in October 1987.

In midmorning trading, the Dow Jones industrial average rose 32.81, or 0.36 percent, to 9,213.50, after declining in earlier trading.

Broader stock indicators were mixed. The S&P 500 index rose 2.47, or 0.26 percent, to 956.56, while the Nasdaq composite index fell 7.34, or 0.43 percent, to 1,691.18.

The Russell 2000 index of smaller companies fell 2.88, or 0.56 percent, to 511.30.

Declining issues outnumbered advancers by about 5 to 4 on the New York Stock Exchange, where volume came to 150 million shares.

In other economic data, the Chicago Purchasing Managers Index, a measure of manufacturing activity, fell to a reading of 37.8 — much worse than the 48.0 figure that analysts anticipated. But the University of Michigan's consumer sentiment data came in at 57.6, slightly better than the 57.5 expected.

Alongside the downbeat but not unexpected readings, investors also considered whether government help for struggling homeowners might be able to help stabilize the housing market and alleviate a worry for many homeowners, even those not behind on mortgage payments.

Federal Reserve Chairman Ben Bernanke is scheduled to speak by satellite Friday to a Berkeley, Calif., conference on the mortgage crisis and is likely to press government officials and lawmakers to continue working on ways to provide more relief.

The Bush administration is mulling a proposal that would help around 3 million homeowners avoid foreclosure by having the government guarantee billions of dollars worth of distressed mortgages.

Investors still held on to their Treasuries in anticipation of a weak economy and more market volatility. The three-month Treasury bill, considered one of the safest assets around, yielded 0.39 percent, only slightly higher than 0.37 percent late Thursday. A low yield translates to high demand. The 10-year Treasury note's yield was 3.88 percent, down from 3.97 percent.

The dollar was mostly higher against other major currencies. Gold prices edged higher.

Crude oil fell $1.23 to $64.73 a barrel on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average fell 5.01 percent. In afternoon trading, Britain's FTSE 100 fell 1.08 percent, Germany's DAX index rose 0.97 percent, and France's CAC-40 fell 1.34 percent.