By Matt Jarzemsky
U.S. stocks and bonds edged lower, paring their gains for the
month, as personal spending and income data fell short of forecasts
Friday.
The S&P 500 slipped less than one point to 1920 in
late-morning trade. The index was up 1.9% so far in May, on pace
for its fourth-straight monthly advance and the biggest such gain
since February.
Selling in Treasury bonds pushed the 10-year note's yield up to
2.468%, according to Tradeweb, paring the biggest monthly price
gain since January for bonds. Uncertainty about the global economy,
coupled with major central bankers' intention to keep interest
rates near zero, has bolstered investors' confidence in buying
bonds of late. Traders also said this year's gains in bond prices
have forced investors to unwind bearish bets, pushing the market
higher.
The past few weeks have been particularly quiet for stocks,
featuring some of the lowest-volume days of the year as investors
stick with their bets, given recent signs of slow-but-steady
improvement in corporate earnings and parts of the U.S.
economy.
"Since the financial crisis, I have not seen it so calm and
comfortable--and I would almost say complacent--with investors'
positioning of their equity holdings," J.T. Cacciabaudo, head of
equity trading at brokerage Sterne Agee.
"If anything, we have seen that the large asset managers have
been net buyers of stocks and they've been adding to existing
holdings, and I can only speculate based on inflows" of new
investor cash into mutual funds and other investment products,
given the calm character of buying activity, Mr. Cacciabaudo
added.
The Dow Jones Industrial Average declined 28 points, or 0.2%, to
16671. The Nasdaq Composite Index eased four points, or 0.1%, to
4244. For the month, the Dow is up 0.6% and the Nasdaq has gained
3.1%.
On the economic front Friday, the Commerce Department reported
U.S. consumer spending fell 0.1% in April from a month earlier,
missing economists' forecasts for a 0.1% increase. April personal
income rose 0.3%, shy of the 0.4% increase forecast by economists
in a Wall Street Journal poll.
The price index for personal consumption expenditures--which is
the Federal Reserve's preferred gauge of inflation--rose 0.2%, in
line with economists' projections.
The Thomson Reuters and University of Michigan's consumer
sentiment index for May showed a final reading of 81.9, up from a
preliminary 81.8.
European markets eased, with the Stoxx Europe 600 down 0.1%.
Crude oil futures slipped 0.8% to $102.72 a barrel. Gold futures
declined 0.8% to $1,247 an ounce.
In the corporate arena, Pacific Sunwear of California's shares
fell 23% after the apparel retailer forecast lower-than-expected
revenue for the current quarter.
Splunk dropped 15%, even after the data-analysis software maker
gave an upbeat revenue and earnings forecast and posted
better-than-expected results for the latest quarter. Despite a
pullback this year, Splunk's shares were up 194% from its April
2012 initial public offering through Thursday.
Write to Matt Jarzemsky at matthew.jarzemsky@wsj.com