Stocks fall after consumer spending remains weak

NEW YORK — Stocks slipped Monday after a report signaled that consumers remain cautious about spending.

The Dow Jones industrial average fell about 6 points in morning trading. Broader indexes also fell. Treasury prices rose and drove down interest rates as investors remained concerned about the economy.

The modest drop in stocks comes ahead of a big week of economic data, including the government's monthly jobs report on Friday. Investors will want to see private sector job growth because any signs of hiring could add confidence that the economy is improving.

A report Monday showed that consumers are still nervous about spending while unemployment remains high. The government said consumer spending rose 0.2 percent last month, just above the 0.1 percent growth forecast by economists polled by Thomson Reuters.

Growth was slow, although personal income rose 0.4 percent. A bigger jump in income than spending means consumers are still unsure about their financial position and choosing to save their money. Weak spending could continue to hamper growth because consumer spending is the biggest driver of the economy.

The tepid recovery has led some leaders around the world to push for new spending to bolster growth. But more government spending would make it difficult to control deficits and could drive up borrowing costs if investors worrying about defaults demand higher interest rates.

The G20, a group of rich and developing nations including the U.S., agreed over the weekend that industrialized nations would halve deficits by 2013. But they didn't resolve differences between those seeking more spending and those looking for cost cuts. Leaders said, however, that they wouldn't pull government support too quickly. There are concerns that the sudden drop in demand could short circuit a global rebound.

Some European nations have been pushing for steep spending cuts to avoid problems such as those encountered by Greece. The country required a European Union-led bailout to avoid defaulting on its debt. Concerns that debt problems would spread beyond Europe and hurt a recovery have hurt stocks since late April and pounded the euro, the currency used by 16 European countries.

In midmorning trading, the Dow Jones industrial average fell 6.27, or 0.1 percent, to 10,137.31. The broader Standard & Poor's 500 index fell 1.82, or 0.2 percent, to 1,074.94. The Nasdaq composite index fell 5.61, or 0.3 percent, to 2,217.87.

Treasury prices rose, pushing down yields. The yield on the benchmark 10-year Treasury note fell to 3.05 percent from 3.11 percent late Friday. Treasurys often rise when investors are uncertain about the strength of the economy because they are stable investments that produce modest gains.

The euro fell to $1.2323.

Crude oil fell 80 cents to $78.06 per barrel on the New York Mercantile Exchange. A tropical storm in the Gulf of Mexico isn't expected to hit the oil spill.

Four stocks fell for every three that rose on the New York Stock Exchange, where volume came to 167 million shares compared with 204 million shares traded at the same point Friday.

Overseas, Britain's FTSE 100 fell 0.2 percent, Germany's DAX index gained 0.5 percent, and France's CAC-40 rose 0.4 percent. Japan's Nikkei stock average fell 0.5 percent.

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