The market is down sharply again in early trading. After breathing a huge sigh of relief last week after the news of Europe's bailout plan was announced, investors seem to be back in sell mode in Europe after Greece says it may seek a referendum on the recent plan. Also, bond yields in Italy have been spiking higher this week indicating continued concerns about conditions there.
All of the above has led to sharp selling in the European bounces (down 3-4%) which has also spread to U.S. markets this morning. Asian markets were lower overnight as well.
In economic news, the ISM Manufacturing Index for October came in below expectations at 50.8, which is also below last month's reading of 51.6. China's PMI reading was also disappointing at 50.4 (from 51.2).
The euro is lower today while the dollar is higher. This is weighing on commodities, with oil prices down to $91.25 and gold prices testing the $1700 levels (currently $1711).
Treasuries are the only thing rising this morning, with the yield on the 10-year back near that 2.0% level. As for the VIX, it is seeing a huge spike this morning up nearly 16% right now back to 34.50.
Trading comment: While the last 2 days have seen a renewed flare-up in Europe, I don't think the wheels are coming back off that quick. October saw an enormous outized rally, and its normal to see some pullback, even if it is sharper that most would like. That doesn't negate the fact that many PMs remain underinvested and will be back in dip buying mode as we head into the final 2 months of the year. The S&P 500 has fallen back to support levels around 1225-1230, an area that had been acting as resistance during the last few months. Let's see if things can calm down and entice buyers to step up.
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