As of 1:30, all three stock market averages have fallen into the negative, albeit modestly. The Nasdaq is down 0.24% to 2,079, the Dow is trading 0.32% lower at 9,596, and the S&P 500 is off 0.17% at 1,042.

The sell-off in equities is driven less by new data, which has been mixed today, and more by profit-taking strategies following five days of advances. It’s certainly not a bad time to sell: since early March, the S&P has increased nearly 54%. Compared to its peak in October 2007, the S&P is still down 33%, but the annual decline is now “only” 16%. Labor markets are still hopeless, but investors are confident that the economy is stabilizing.

Some data this morning was supportive of that interpretation, as the Reuters/University of Michigan measure of consumer sentiment shifted from neutral, driving nearly 5 points to 70.2 in September. The current conditions index rose from a devilish 66.6 to 71.8 in the month, while consumer expectations climbed from 65.0 to 69.2.

Despite the upside surprise, many analysts were pessimistic about the prospects for a sustained recovery. “While these were notable positives, consumer attitudes about the state of their finances remained at low levels and certainly well below levels in September 2008,” said Brian Bethune, economist at IHS Global Insight. Record numbers of consumers reported income declines in September. This reflects general downward pressure on wages and salaries, reduced work hours, and involuntary unpaid time off.”

Similarly, chief economist Sherry Cooper of BMO Capital Markets said, “the economy has been boosted by inventory rebuilding and improving net exports, but there is little sustained impetus for a consumer revival.”

It didn’t help that, five minutes after that release, it was reported that wholesale inventories were reduced by 1.4% in July, a faster pace than expected. Inventories have been cut for 11 consecutive months now, a new record in almost two decades of tracking the data.

Meanwhile, gold prices increased as much as $13.60 to $1,010.40, the highest price since February. Conversely, a sixth day of losses for the US dollar have created a fresh 2009 low. 

Import prices advanced 2% in the latest data for August, and the weakening dollar will only make foreign goods even more expensive in the months ahead.