Happy Halloween, Everyone!!

Nope, it’s not a trick at all! Today’s session brought the Dow Jones Industrial Average once again to a new all-time record just shy of the 17,400-mark. As a result, we close out this extremely volatile month of October with all of the American indices back in the green for the year. Even the Russell 2000, full of volatile small cap names, has regained its over 10% loss for the year and is currently up 0.38% for 2014. Market concerns over Ebola and ISIS have apparently subsided for now, but the bigger question mark remains over what will happen with the price of oil long-term. Today, oil futures dropped below $80 per barrel once again and the national average price for a gallon of gas fell below $3 for the first time since 2010. Ultimately, the price issue falls into the hands of the Saudi Arabian government, who can drastically increase the price again by cutting production. For now, the consumer ought to feel the effect of more money in their pockets and should put that money to work in the form of buying gifts for the holidays. In addition, there were two significantly optimistic reports released mid-morning that point to a further boost in the industrial and consumer sectors.

Firstly, Chicago was the latest Fed district to jump on the bandwagon of positive manufacturing data in October. The purchasing managers’ index (PMI) in Chicago jumped 5.7 in the month to 66.2, which is the best reading in about a year. The gain this month was led by new orders, the most important component, which jumped to 73.6 and is also at the highest reading in over a year. Backlog orders and production were also higher in October, while the employment component is at its best level since last November. Chicago also experienced a draw in overall inventories and an easing in pricing pressures during the month. This report covers both the manufacturing and the non-manufacturing sectors, and this boost in figures ought to bode well for the ISM reports which will be released next week. Below is a chart of the Chicago PMI since the start of the recession.

Additionally, consumer sentiment noted by the University of Michigan reached its best performance since the start of the recovery in October. The index posted a final monthly reading of 86.9 which was slightly higher than the mid-month flash reading of 86.4, but significantly better than September’s final reading of 84.6. This marks the highest reading posted by the index since July 2007. The expectations component led much of the gain this month, coming in at a final reading of 79.6, which majorly trumped September’s reading of 75.4. This component points to just one more data point expressing higher confidence in the October employment situation report. The current conditions component continues to be strong, holding near its recovery best levels which it’s stayed for the last year, but ticked slightly lower in October compared to last month. This means that consumer activity was strong in October, but it isn’t drastically accelerating. Inflation readings were held down thanks to lower gas prices. The 1-year outlook on inflation slipped from September to 2.9% with the 5-year outlook unchanged at 2.8%. While these numbers appear great, this morning’s personal income and outlays report noted that income growth is no better than just moderate right now. However, the boost in confidence points to an even better jobs report which in turn will boost the level of income and spending.