A minus 9.0 showing for general sentiment masks tangible positives in October's Philadelphia Fed manufacturing report especially a plus 4.4 result for new orders, versus minus 10.2 in September. Shipments, at 10.8 versus minus 3.2, also improved as did employment, at 4.0 versus minus 5.7.

But joining the headline in the negative column are unfilled orders where contraction deepened more than 3 points to minus 16.8, and also the workweek at minus 4.3 and down from September's plus 4.7. Price readings are steady, showing only marginal moderation for costs and selling prices.

Despite October's improvement in new orders, sentiment is subdued in Philadelphia's sample, down nearly 2 points to 9.2 for the six-month outlook. This report is generally in line with Monday's mixed Empire State data, both pointing to flat conditions for US manufacturing.

Swinging wildly into the plus column at 12 in August then swinging wildly into the negative column to minus 13.5 in September. the Philadelphia Fed manufacturing index in October is expected to improve to minus 7.0.

The general conditions index from this business outlook survey is a diffusion index of manufacturing conditions within the Philadelphia Federal Reserve district. This survey, widely followed as an indicator of manufacturing sector trends, is correlated with the ISM manufacturing index and the index of industrial production.

Investors need to monitor the economy closely because it usually dictates how various types of investments will perform. By tracking economic data such as the Philly Fed survey, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more moderate growth so that it won't lead to inflation. The Philly Fed survey gives a detailed look at the manufacturing sector, how busy it is and where things are headed. Since manufacturing is a major sector of the economy, this report has a big influence on market behavior. Some of the Philly Fed sub-indexes also provide insight on commodity prices and other clues on inflation. The bond market is highly sensitive to this report because it is released early in the month and is available before other important indicators.