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October lived up to its reputation for volatility as triple-digit intraday swings in the Dow became almost commonplace. Despite being spooked for much of the month--at one point the S&P 500 was down almost 8% from its most recent high--both the S&P and the Dow industrials rallied strongly to end the month at fresh all-time records. Generally encouraging corporate earnings from U.S. companies, a strong Q3 GDP, and increased central bank support overseas helped equities markets overcome fears about the end of the Federal Reserve's quantitative easing and global concerns about slowing growth and the threat of Ebola.
Increased U.S. energy resources and reduced global demand meant that oil prices continued to drop, ending the month at roughly $80 a barrel. The dollar maintained its September gains against a basket of six foreign currencies; since oil is traded in dollars, a stronger dollar also helped keep oil prices in check.
Meanwhile, after a bounce at mid-month, the price of gold plummeted to roughly $1,170 an ounce. Not surprisingly, the volatility in equities caused the yield on the benchmark 10-year Treasury to fall briefly to its lowest level since June 2013 as investors sought the relative safety of Treasury securities.

The Month in Review

• The U.S. economy grew at an annualized rate of 3.5% during the third quarter, according to the initial estimate by the Bureau of Economic Analysis. That was slightly less than Q2's 4.6%, but still much stronger than during 2014's first quarter.

• The 248,000 new jobs created in September helped cut the U.S. unemployment rate from 6.1% to 5.9%; it's the first time since July 2008 that joblessness has been below 6%. Also, the Bureau of Labor Statistics said hiring during the prior two months was stronger than previously thought. However, at least some of the decline in the unemployment rate resulted from 97,000 people, such as retiring baby boomers, dropping out of the labor force. That brought the percentage of people in the workforce to 62.7%--the lowest participation rate since 1978.

 

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Market Month: October 2014

 

photoThe Employees of Indiana Trust Company met with other volunteers on Saturday, October 18, 2014 in downtown Muncie, IN to help beautify our community and pick up trash and litter. Muncie Clean and Beautiful sponsors the effort each month to build pride in the community and clean one of Muncie's most historic and unique areas. Pictured are Rob Santoni, Lavone Whitmer, Brad LaTour, Archie Spangler, and Marty Hillery (and his wife, Rose).

latour01BRADLEY S. LATOUR, Vice President at Indiana Trust Company, has been elected to the Friends of the David Owsley Museum of Art Executive Committee at Ball State University. “I’ll witness the vision of the museum’s new director unfold,” said Brad.  “It’s an exciting time to be involved with the university.”

standdown600Veterans were honored and aided by the Michiana Military Stand Down held in South Bend in September. Because of the vast difficulty that many veterans face when tours-of-duty are over, these events have been popping up all over the country in an effort to help.  While geared toward homeless vets in particular, all veterans were welcomed and thanked for their service.  Colonel Kent Laudeman, Director of the Robert Miller Sr. Veteran’s Center, helped to organize this wonderful event.  Many organizations were there to represent veteran service agencies as well as various employment agencies.  Veterans were also given donations of free food, clothing, hygiene products and even health related services such as haircuts and health screenings. “I am just truly impressed with the service people that have come together to make this day the first day for this stand down,” said Laudeman.

Indiana Trust employees were on hand to help the event run smoothly.  From setting up tables, organizing and handing out donations, helping with paperwork, all the way to helping clean up, the Indiana Trust family was there to be of service.   Not only did our tireless employees help with the various events of the day, Indiana Trust also gave a donation to help with on going outreach.  “Our service men and women give their all to keep our country safe.  This is just one of the many things we can do to help thank them,” said Amy Jordan.  Many thanks to Debbie Klosowski, Jon-Michael Plennert, Nikki Anderson, Tina Patton, and Amy Jordan for all their energy and kindness put in to making this event such a success.

Third Quarter Market Review

The Markets

Volatility returned to equities markets in Q3. A strong August was followed by losses in September, when any rallies began to focus around selected winners rather than benefitting stocks across the board. Investors exhibited a decided preference for large caps; the S&P 500 closed above 2,000 for the first time ever and the Dow industrials also set new all-time highs. The Nasdaq returned to a level it hadn't seen since March 2000 and regained the lead for 2014. However, the Russell 2000, which has struggled for most of the year, fell deeper into negative territory year-to-date, while the Global Dow suffered from political conflicts abroad and concerns about global growth.

Bond investors continued to demonstrate surprising resilience. In early September, the yield on the benchmark 10-year Treasury fell to 2.35%--a level it hadn't seen in more than a year--as prices rose. However, as the Federal Reserve continued to taper its economic support and ramped up discussion of how and when to increase rates, demand began to taper off (though geopolitical anxieties and a strengthening dollar kept the decline in check). Gold, which started the quarter at roughly $1,320, ended below $1,220. It was hurt in part by a stronger U.S. dollar, which by the end of the quarter had hit its highest level against the euro in almost two years. Dollar strength coupled with weaker global demand also meant lower oil prices; a barrel fell from $107 a barrel to roughly $93 during the quarter, a level it hasn't seen since January.

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Quarterly Market Review July - September 2014