DALLAS, Jul 27, 2004/ FW/ --- July is turning out to be good news / not so good news month in Wall Street, with the Conference Board reporting that consumer confidence, one of the leading economic indicators which increased sharply in June, posted further gains in July. The Index now stands at 106.1 (1985=100), up from 102.8 in June. The Expectations Index jumped to 105.8 from 100.8. The Present Situation Index edged up to 106.5 from 105.9 in June.

On the other hand, State Street Associates, the research unit of State Street Global Markets reported that investor confidence declined by 1.2 points to 84.3 from June's revised reading of 85.5.

So, what does this mean?

Consumers are optimistic! And that’s the good news. According to the Conference Board report, consumers' assessment of current conditions was somewhat mixed, but favorable overall.

Those saying business conditions are "good" was relatively flat, at 25.6 percent compared to 25.8 percent last month. Those claiming conditions are "bad," however, edged up to 19.1 percent from 17.4 percent. Those saying jobs are "plentiful" rose to 19.8 percent from 18.3 percent. Consumers claiming jobs are "hard to get" was virtually unchanged at 26.0 percent, compared to 26.2 percent in June.

"Consumer confidence has now increased for four consecutive months, and is at its highest level since June 2002 when it registered 106.3," says Lynn Franco, Director of The Conference Board's Consumer Research Center. "The spring turnaround has been fueled by gains in employment, and unless the job market sours, consumer confidence should continue to post solid numbers."

As for investors, the modest 1.2 decline means that institutional investors reduced the overall risk of their portfolios by systematically cutting average equity positions when measured in proportion to their holdings.

With the July reading the the sixth decline this year, reflecting a strong change in sentiment since the end of 2003.

"It's becoming clear that investors do not see sufficient growth in earnings to justify recent price levels, especially in the context of increasing interest rates," said Froot. "This decrease is driven by a decline in investor sentiment, but U.S. equities are clearly leading the way."

Overall, the news is still good and the economy is still showing positive gains.