Economic Update 10/22/14

CONSUMER SENTIMENT: A PLEASANT SURPRISE

Ebola fears and a choppy stock market haven’t quite rattled household optimism. At a reading of 86.4 (its highest in more than seven years), the University of Michigan’s initial October consumer sentiment index confounded analysts who expected a decrease from September’s final 84.6 mark. Consensus forecasts from MarketWatch and Briefing.com both predicted a retreat to 83.5. September’s 0.3% slip in retail sales remained a consumer question mark, especially after August’s 0.6% gain.

U.S. INDUSTRIAL OUTPUT RISES 1.0%

September’s gain doubled the forecast from Briefing.com and more than made up for the 0.2% August dip. Elsewhere on the factory front, the September edition of the Producer Price Index retreated 0.1% with the core PPI being flat.

HOUSING STARTS & BUILDING PERMITS INCREASE

The Census Bureau announced a 1.5% rise in building permits for September plus a 6.3% improvement in groundbreaking. The latter gain put the annualized rate for housing starts back above the 1 million level.

DOW ENDS WILD WEEK WITH 263-POINT ADVANCE

Even with Friday’s huge gain, the blue chips fell 0.99% across five days to 16,380.41. The week also saw retreats for the NASDAQ (0.42% to 4,258.44) and S&P 500 (1.02% to 1,886.76).

THIS WEEK: Monday, Wall Street considers earnings from Apple, Chipotle, IBM, Boise Cascade, Gannett, Halliburton, Texas Instruments and Hasbro. September existing home sales numbers and China’s Q3 GDP reading appear Tuesday, plus earnings from Coca-Cola, E*TRADE, Lockheed Martin, Harley-Davidson, Verizon, Yahoo!, Whirlpool, RadioShack, Kimberly-Clark, Six Flags Entertainment and McDonald’s. The September CPI emerges Wednesday, along with earnings from Stanley Black & Decker, AT&T, Abbott Labs, U.S. Bancorp, General Dynamics, Boeing, Equifax, Dow Chemical, GlaxoSmithKline, Norfolk Southern, Northrop Grumman, Wynn Resorts, Xerox and Yelp. On Thursday, the market studies a new Conference Board LEI index, new initial claims figures and earnings from Comcast, IMAX, 3M, AllianceBernstein, Credit Suisse, Dr. Pepper Snapple, Amazon.com, Caterpillar, Eli Lilly, Dolby Labs, Dunkin Brands, General Motors, JetBlue, Pandora, Microsoft, Nielsen, Nokia, Occidental Petroleum, PulteGroup, Raytheon and Southwest Airlines. Friday, September’s new home sales report joins earnings from Ford Motor Co., UPS, Choice Hotels, Magellan Health, Omnicare, Procter & Gamble, State Street, Bristol Myers Squibb, Colgate-Palmolive, and Avery Dennison.