Stocks end May on a down note

NEW YORK Stocks faded in late-day trading amid mixed news for the U.S. economy.

The Dow Jones industrial average fell 209 points, or 1.4 percent, to close at 15,116. The Standard & Poor's 500 finished at 1,631, down 24 points, or 1.4 percent. The Nasdaq composite lost 35 points to 3,456.

Stock indexes started the day lower after the government reported that Americans cut back on spending. Consumer spending fell 0.2 percent in April, the first decline since last May, the Commerce Department said early Friday. 

Despite the dip, the Dow advanced for a sixth straight month. The S&P 500 gained for a seventh straight month, its longest winning streak since 2009.

• Consumers cut spending in April
• Fed tightening: A disciplined response
• Wealth of Americans down 55 pct since recession

In a positive signal for the economy, a measure of U.S. consumer confidence released later in the day jumped to its highest level in almost six years in May, lifted by rising home prices and record-high stock prices. The University of Michigan's consumer sentiment index rose to 84.5 in May, up from 76.4 in April and the highest since July 2007. Investors are hoping that increasingly confident consumers will step up their spending, which would contribute to U.S. economic growth.

In government bond trading, the yield on the 10-year Treasury note rose to 2.19 percent from 2.12 percent late Thursday. The yield has risen by half a percentage point since the start of the month and is the highest it's been since April 2012.

Rates have risen on concern that the Federal Reserve is considering easing back on its purchases of $85 billion in bonds every month.

The sharp rise in Treasury yields could be trouble for the market if it continues unabated, said David Bianco, chief U.S. equity strategist at Deutsche Bank. The yields on Treasury notes are benchmarks for setting interest rates on many kinds of loans to consumers and businesses. If they rise quickly, lending rates would rise too, holding back the economy by discouraging borrowing and spending.

"I'm not bearish, but I'm a little bit cautious," Bianco said.

Before Friday's session, the Dow was up 3.3 percent this month and was on track to record its first gain in May since 2009. The S&P 500 index had risen 3.5 percent.

The S&P 500 has fallen in only one month, October, over the last year.

The "sell in May" tactic is part of the Stock Trader's Almanac's "Best Six Months" strategy, which recommends investing in the Dow between Nov. 1 and April 30 each year and then switching into fixed income for the remainder of the year.

The Dow rose an average of 7.5 percent between November and April between 1950 and 2011, according to this year's Almanac. The average gain over the six-month period from May 1 to Oct. 31 was only 0.3 percent.

In commodities trading, oil fell 77 cents, or 0.8 percent, to $92.84 a barrel, close to its lowest in a month, after OPEC oil ministers said they would keep their output targets steady. Gold fell $17.30 to $1,395 an ounce, a decline of 1.2 percent.