Markets in the U.S. and in Europe initially rallied on the news that the U.S. manufacturing sector expanded in September for the first time in four months. The Institute for Supply Management's manufacturing gauge rose to 51.5 last month from 49.6 in August, the highest reading since May, beating the expectations of 49.7. Readings over 50 indicate that more manufacturers are expanding instead of contracting. The ISM had been below 50 for three straight months until the September reading. But manufacturing in China slowed for the second straight month and factories in the Eurozone experienced their worst quarter since early 2009.
The morning rally fizzled as U.S. markets ended in the lower half of their trading range but on lower volume. The battle once again is on between quantitative easing from central banks around the world vs. signs of global economic weakness and continued issues in the Eurozone. This morning U.S. futures are again up sharply in a replay of yesterday's pre-open action.
Precious metals ETFs gapped higher yesterday but retraced their moves on higher volume as both the GLD and SLV were unable to break through recent price highs. Resistance remains for the GLD at the 173-174 level while silver has yet to close above the 34 price level. Significant breakouts through these levels would likely signal another upleg for the metals, but as of yet this has not been forthcoming . Meanwhile, Apple (AAPL) slumped again on higher volume as it moves to within 2% of its 10-week moving average, currently running through the 650.73 price level.