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Yesterday, the stock market was doing the happy dance. Today, the economic data related to 3rd quarter GDP was revised downward. And so the bulls are pulling back as profit takers make a little money and the bears point out that the economy isn’t quite ready to come roaring back.

Consumer confidence is also on shaky ground, and by now most of us know that consumer activity accounts for about 2/3 of economic activity. Yes, consumer confidence showed some improvement, but it wasn’t a ton of improvement, and it couldn’t outdo the news that the economy didn’t grow as much as initially thought in the 3rd quarter. It’s nice that companies have seen growth in profits, but most of that is at the expense of jobs as layoffs have been used as cost-cutting measures. And fewer jobs just brings the consumer confidence isues back to the forefront of everyone’s mind.

Everyone is hoping that the holiday shopping season will help matters, showing improvement in consumer spending. But if jobs continue to be lost, it’s hard to go out and make the holidays merry and bright for retailers. But as long as investors are concerned about protection, solid growth will be hard to come by. MarketWatch reports on the stock market and investor sentiment:

It doesn’t help that many managers are now entering “protection mode” for the gains they’ve made this year, Fertig said. “There’s a very quick trigger on any kind of negative news to take some chips off the table, particularly in the financials and the areas that have had a tremendous recovery in 2009,” he added.
The market failed to take much heart from a report showing U.S. consumer confidence improved in November, recovering somewhat from a sharp drop in October. However, other elements of the report showed that U.S. consumers continue to be especially anxious about a sluggish U.S. economy.

It will be interesting to see how the rest of the rest of the year plays out.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.