* Palm shares jump 16 percent, says Pre demand strong
* Falling oil sinks energy shares
* Higher savings rate raises consumer spending worries
* Volume jumps late as Russell 3000 index reconstituted
* Dow off 0.4 pct, S&P off 0.2 pct, Nasdaq up 0.5 pct
* For up-to-the-minute market news click []
(Updates close with late volume surge, volatility details)
By Edward Krudy
NEW YORK, June 26 (Reuters) - The Nasdaq rose on Friday,
on strong demand for Palm's Inc's <PALM.O> Pre smartphone,
while the Dow was dragged lower by sliding oil prices and
strength in some financial stocks helped cushion the S&P 500's
decline.
The technology-heavy Nasdaq outperformed, helped partly by
gains in Palm after it posted a narrower-than-expected loss
late on Thursday and said demand was strong for its new Pre
smartphone. Palm shares jumped nearly 16 percent to $16.22.
[]
Weighing on sentiment, a jump in the savings rate
suggested that the debt-burdened U.S. consumer may not drive
the economy out of recession as fast as hoped.
Data showed that while consumer spending and income both
rose in May as the government stimulus spread through the
economy, much of the money was being stored away. Savings
jumped to a record annual level of $768.8 billion, the highest
level since record keeping began in 1959. (For details, see
[])
Robert Stimpson, portfolio manager at Oak Associates in
Akron, Ohio, said that while he did not put too much store on
the savings data alone, the trend in the United States was
toward more saving and less spending.
"The U.S. markets are probably going to lag the rest of
the world because we have a need to pay down debt, increase
our savings rate and be better stewards of our own capital,
which might lead to lower consumer spending versus the rest of
the world," Stimpson said.
There was a strong surge in trade late in the session,
pushing volume significantly above last year's daily average,
as Russell Investments announced the final reconstitution of
the widely followed Russell 3000 index<.RUA>.
But the session was relatively quiet for most of the day
after a busy week that included Federal Reserve Chairman Ben
Bernanke's contentious appearance on Capitol Hill and the sale
of a record $104 billion in U.S. Treasury debt.
The Dow Jones industrial average <> dropped 34.01
points, or 0.40 percent, to 8,438.39. The Standard & Poor's
500 Index <.SPX> fell 1.36 points, or 0.15 percent, to 918.90.
But the Nasdaq Composite Index <> gained 8.68 points, or
0.47 percent, to 1,838.22.
The Chicago Board Options Exchange Volatility Index<.VIX>
or VIX, Wall Street's most popular indicator of investor
anxiety, closed at 25.93, its lowest level since Sept. 12, the
Friday before Lehman Brothers went into bankruptcy.
For the week, stocks finished mixed. The Dow slid 1.19
percent and the S&P 500 fell 0.25 percent, while the Nasdaq
rose 0.59 percent.
The S&P 500 has climbed as much as 40 percent since
hitting a 12-year closing low in early March. But the rally
has stalled in recent weeks as investors look for more signs
of an economic recovery. Some analysts are expecting a
significant pullback in stock prices over the summer.
"Today is a real mixed market without any significant
trends," said Michael Sheldon, chief market strategist at RDM
Financial in Westport, Connecticut. "Generally there is a lack
of conviction about what the next direction for the market
will be."
Oil settled below $70 per barrel, hitting energy
bellwethers Chevron Corp <CVX.N>, down 1.4 percent at $65.95,
and Exxon Mobil Corp <XOM.N>, off 1.2 percent at $68.05.
Goldman Sachs<GS.N> was among the financial sector's
stronger stocks, up 1.6 percent at $146.74, while JPMorgan
<JPM.N> added 0.9 percent to $34.45.
Analysts noted stocks were buffeted by profit taking after
Thursday's 2 percent gain, as well as by end-of-quarter
"window dressing." This can add volatility as portfolio
managers sell stocks with big losses and buy some of the
quarter's best-performing issues to help improve their
returns.
Trading volume was heavy on the New York Stock Exchange,
with about 2.35 billion shares changing hands, far above last
year's estimated daily average of 1.49 billion, while on
Nasdaq, about 4.31 billion shares traded, sharply above last
year's daily average of 2.28 billion.
Advancing stocks outnumbered declining ones on the NYSE by
1,833 to 1,170 while on the Nasdaq, there were 1,714 advancers
and just 937 decliners.
(Editing by Jan Paschal)
