The aftermath of yesterday’s market beat down left many investors shell-shocked, and it appeared as though this morning, we were off to experience much of the same thing. However, after a slew of mixed economic data, and positive earnings, the major indices have been making a slow crawl to the upside. Following the market meltdown in yesterday’s session, global exchanges suffered overnight with the NIKKEI (in Japan) closing down 2.2% and touching a 4-month low intraday. In Europe, the major stock indexes on the continent dipped more than 2.0% at the open as well. Goldman Sachs, Netflix, and eBay all declined on disappointing earnings while United Healthcare, United Rentals and Delta Airlines all rose on better-than-expected outlooks. This morning’s jobless claims were great; in fact the initial claims hit the lowest level since way back in April 2000. However the rest of today’s economic data raises more questions than it provides answers.

Firstly, the level of industrial production for September showed that manufacturing is not only positive, but well above analysts’ expectations and that utilities were surprisingly not the only major driver. Production increased by a whopping 1.0% in September after declining by 0.2% in August, and analysts had forecasted an increase of 0.4%. Utilities continued to make impressive gains rising by 3.9% in September following a 1.2% increase in August. More importantly, manufacturing was solid overall rebounding by 0.5% in September after a 0.5% decline in August. Expectations were for a 0.4% increase in the month. Mining activity also advanced by an impressive 1.8% after an increase of just 0.3% in August. The production of durable goods advanced 0.4%, led by an increase in activity in aerospace and miscellaneous transportation equipment. Excluding petroleum and coal products, each of the major components of nondurables posted gains in September, which overall increased by 0.5% in the month. Capacity utilization (charted with the production index below) jumped to 79.3% from 78.7% in the prior month. Overall the third quarter of 2014 should show some healthy GDP growth as manufacturing appears to have regained lost steam.

 In a stark contrast to the Empire State’s report yesterday, there was no such sudden pause in activity in Philadelphia’s manufacturing sector. The Philly Fed’s general conditions index held steady at a strong reading of 20.7 in October compared to September’s 22.5. The most important component of the report is in new orders, which actually increased to 17.3 compared to the 15.5 reading in September. Unfilled orders were also positive at 11.6 after a 5.0 reading in September – in fact this is the strongest reading since July 2004. Employment growth was down in October to 12.1 after a reading of 21.2 in the prior month while the work week showed its first contraction since February at -1.3. Price readings show steady and tangible pressure for inputs and strong price traction for finished goods, increasing to a 20.8 reading which was last matched in April 2011. Inventories are also higher at 14.8, but the build is likely desired given the strength in overall orders. The outlook index was only down 1.5 points to 54.4, but we note that this is the third strongest reading in 2014. Overall the Philly Fed report underlines the strength in the industrial production data, where manufacturing in particular is improving.

Lastly, the drop in mortgage rates this month apparently isn’t driving any robust increase in demand for housing. We saw this in the weekly MBA report yesterday for purchase applications, and now the housing market index for the National Association of Home Builders (NAHB) is showing similar sentiment. The NAHB index was down 5 points in October to 54 after rising to 59 in September. The key component in the monthly report was traffic, which was down a full 6 points to 41. Ultimately, a lack in traffic points to lack of interest, including a lack of interest among the important group: first-time home buyers. All regions showed declines in the composite score, but the weakest was in the Midwest which declined by 8 points to 53 and the West which is down 7 points to 54. Probably the most discouraging thing about this report is that new home builders can’t blame weakness on high interest rates or high unemployment. Something else is array and we ought to get a clearer picture as more housing data is released in the coming weeks.