U.S. Consumer Confidence Hits 17 Year High

The Conference Board reported on Tuesday its consumer confidence index increased 5.3 points to 125.9 this month, the highest reading since December 2000. Traders said the surge in confidence was probably driven by expectations of big tax cuts after President Trump and Republicans in the U.S. Congress vowed to enact tax reform this year.

Record high stock prices also helped boost consumer confidence this month. Demographics showed a split in confidence. It increased sharply among households in the $125,000 and over income group, but optimism among low-income consumers was mostly lower.

Another report showed sustained increases in house prices in August. The S&P/CS Composite-20 HPI came in at 5.9%, higher than the forecast and previous read of 5.8%.

Tightening labor market conditions are gradually generating a faster pace of wage growth. A separate report from the Labor Department showed the Employment Cost Index, the broadest measure of labor costs, increased 0.7 percent in the third quarter after rising 0.5 percent in the second quarter.

That lifted the year-on-year rate of increase to 2.5 percent, the largest gain since the first quarter of 2015.

The Chicago PMI rose 66.2 in October from 65.2 in September. This reading was the highest since March 2011. The consensus forecast had called for it to come in around 62.

U.S. Equity Markets

U.S. stock indexes posted slight gains on Tuesday, but still posted another monthly gain. The benchmark S&P 500 climbed 2.2 percent and the blue chip Dow Jones Industrial Average rose 4.3 percent. The two indexes also posted their seventh straight monthly gain.

The tech-based NASDAQ Composite closed 3.6 percent higher in October, recording its fourth straight monthly gain while closing at a record high.

Gold

Gold prices fell on Tuesday as the U.S. Dollar recovered from early losses and investors remained cautious ahead of Wednesday’s U.S. Federal Reserve interest rate decision and monetary policy statement. Traders were also worried about President Trump’s announcement of the new Fed chair which he is expected to make on Thursday. Traders are also concerned about Friday’s U.S. Non-Farm Payrolls report.

Crude Oil

Oil prices rose slightly on Tuesday as investors continued to remain optimistic that the OPEC-led strategy to cut production, trim the global supply and stabilize prices would be extended beyond the March 2018 deadline to the end of the year.

Dampening the bullish sentiment however were concerns over increasing U.S. exports and rising exports from Iraq. End-of-the-month position-squaring also limited the upside price action.