Retail sales rose, auto sales fell, consumer confidence dropped to its lowest level in six months and equities surged in response to today's smorgasbord of economic statistics.
The confusing market picture reinforces the Federal Reserve contention that the U.S. economy is not strong enough to tolerate the rise in interest rates that would follow a reduction in its $85 billion a month in economic support.
Overall retail sales decreased 0.1 percent in in September, slipping from August's 0.2 percent gain. It was slightly worse than the flat forecast and the weakest reading since March.
But in stripping out car purchases, the so-called 'ex-autos' number, sales rose 0.4 percent matching the prediction and four times the 0.1 percent increase in August.
On the year retail sales were 3.2 percent higher in September, down from the 4.6 percent increase in August and the lowest annual gain in six months. The 'ex-autos' annual addition skidded to 2.8 percent in September from 3.2 percent the previous month also the slowest rise in six months.
Consumer confidence as measured by the Conference Board index slumped to 71.2 in October from last month's upwardly revised 80.2, suffering the largest monthly decline since August 2011 as the government shutdown, stationary wages and limited job opportunities undermined consumer outlook. The Bloomberg survey of economists had predicted 75.0. It was the lowest reading since April.
Consumers' confidence in their present and future economic situation retreated in September. The index for their current status slipped to 70.70 from 73.50, the weakest since June. The index for consumers’ expectations for economic status six month out dropped to 71.50 from 84.70 in August. It was the biggest one month drop since the 22.5 point plunge from July to August 2011.
Mid-way through the afternoon, the Dow was up 97.55 points, 0.63 percent at 15,666.50 and the Nasdaq was 7.19 points higher, 0.18 percent at 3,947.32.
Despite the checkered economic situation, the prospect of another Washington budget fight in February and ebbing job creation, equity traders remain convnced that any reduction in quantitative easing is quarters if not years away.
There seems little doubt the Fed will sustain that view at tomorow's FOMC meeting.
Chief Market Strategist
WorldWideMarkets Online Trading