Bullish sentiment certainly waned in September – when the month was over, the Dow, Nasdaq, S&P 500 and Russell 2000 had all retreated to varying degree. The latest consumer indicators were mostly encouraging. Personal spending – which had declined 0.1% in July – rose 0.5% for August. Shoppers were opening their wallets a bit more as inflation remained benign
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August has often been a good month for stocks, and the eighth month of 2014 was no exception. Most U.S. indicators signaled a healthier economy, perhaps one strong enough to motivate the Federal Reserve to raise interest rates a bit sooner than forecast. If households were retaining more of their incomes than expected, they were also more confident in August than they had been the previous month.