Recapping the day's news and newsmakers through the lens of CNBC.
So-so reading on the American consumer
The American consumer is not doing his part to help prop up the overall rosy picture of the U.S. economy, a picture for which the positive data points keep coming in and coloring economic glasses. Consider growth in the U.S. service sector: it accelerated in July to the highest level in five months. The Institute of Supply Management said its services index rose to 56, handily beating expectations for 53. June's level was 52.2. A reading over 50 means the sector is expanding.
But consumer spending has stayed flat for the last three months. A Gallup poll said "self-reported" daily consumer spending was $89 in July, virtually unchanged from the $90 reported in May and June.
Consumer spending has strengthened considerably since the depths of the Great Recession but still trails pre-crisis levels.
The consumer and the retail investor seem to have something in common when it comes to not wanting to step up and buy. Signs of skittishness surfaced in a proprietary study by TD Ameritrade showing that retail investor sentiment was at its lowest point since January.
That means retail investors, as opposed to institutions, were net sellers of stocks. The TD gauge, covering six million accounts, gives higher weight to active traders over buy-and-hold types, for a view of how sentiment will affect investor behavior going forward.
The high level of profit taking the survey found is not typical investor behavior when the market is hitting record highs, and may reflect worries about the Federal Reserve ending the bond-buying program that has helped to keep interest rates low.
"Consumer spending has remained basically at that ($90-a-day) level ... in the face of what are normally positive seasonal factors such as warmer weather, home improvement projects, and spring and summer travel."
"I think it's taper fears. The investing public is not stupid. They know it's coming and this is probably a point that if you've seen appreciable gains, you should start taking them off the table."
—Steve Quirk, senior vice president of TD Ameritrade's Trader Group