Stocks declined Friday as investors shrugged off a surge in consumer sentiment, instead focusing on the fact that consumers are squirreling away their money at a feverish pace.
But techs gained after encouraging earnings from Palm, pushing the Nasdaq intermittently into positive territory.
The New York Stock Exchange said it fixed a technical glitch in one of its order-matching engines this morning, which affected trading in more than 550 stocks, including Citigroup , Kroger and Jefferies .
Consumer spending ticked higher and income rose more than expected but the troubling thing for investors was that the savings rate surge to its highest in 15 years.
But sentiment soared in Juneto its highest since February 2008 as consumers are starting to feel the recession's grip easing. The Reuters/University of Michigan confidence index rose to 70.8 in the final June reading from 68.7 at the end of May. Economists had expected a reading of 69.
In another encouraging sign for the economy, KB Home reported a wider-than-expected loss but said that the housing decline is moderating.
"Although key economic indicators remain mixed, we are beginning to see signs that some negative housing market trends may be moderating at both the local and national levels,'' Chief Executive Jeffrey Mezger said in a statement.
Investors shifted back into riskier assets in the last few days of the second quarter after the Federal Reserve indicated on Wednesday it would keep interest rates low for a while. On Thursday the Fed extended some of its emergency-funding facilities and its currency-swap lines with global central banks to provide ample dollar funds, Reuters reported.
Stocks had their best performance in three weeksThursday, but some analysts said Wall Street may pause for a bit of profit-taking.
JPMorgan Securities said in a research note that the Standard & Poor's 500 was facing a correction that would likely send the index down to 830 to 875, which would represent a 5 to 10 percent drop from its current level.
But, as other analysts have predicted, JPMorgan sees a rally by year end which would take the S&P up to 950 to 1,000.
Techs advanced after smart-phone maker Palm posted a narrower-than-expected lossamid strong demand for the Palm Pre, which just debuted in June. The gadget's popularity is expected to be more fully reflected in the current quarter's results.
Palm shares were up about 10 percent.
But shares of Micron Technology slipped after the chip maker posted its 10th consecutive loss.
General Electric shares declined after CEO Jeff Immelt said the company's financial-services unit is currently undervalued and is worth up to $20 billion.
Boeing shares ticked higher despite another setback with its Dreamliner model after Australian airline Qantas scrapped and deferred orders for 30 new planes.
General Motors advanced despite concern that the automaker may face further difficulty selling its Hummer unit after a report said China's planning agency is likely to block the acquisition of HummerbySichuan Tengzhong Heavy Industrial Machinery.
GM CEO Fritz Henderson urged a speedy exit from bankruptcy protection, saying it could hurt the automaker's suppliers.
Oil prices were back below $70 a barrel, after a pop above $71 following Exxon Mobil's announcement that its huge Baytown refinery suffered an operational glitch that triggered concerns the largest U.S. oil refiner could tighten gasoline stockpiles during this summer's peak demand driving season, according to Reuters.
UBS said it was planning to raise $3.5 billion in capital, a move that analysts said would be positive even as they speculated about how long it would take for the bank to stabilize. Shares fell 5 percent premarket.
Dallas Fed President Richard Fisher speaks on the economy at 1:30 pm in Dallas.