By Greg Peel

The Dow rose 130 points, or 0.9%, while the S&P gained 0.9% to 1597 and the Nasdaq added 1.3%.

Well, so much for Sell in May. Over the first two days of the month the S&P 500 has fallen 0.9% and risen 0.9%, returning to once again test the 1600 level that has to date proven stiff resistance. I have noted in the past that the "smart money" never responds to a Fed statement on the day, but rather sleeps on it and decides which way to play it the next day. On Wednesday night it seemed no one much liked the Fed's new QE infinity model. Last night they decided it's better to go with it than fight it.

It helped that the economic data highlight of the day was positive. Never mind Wednesday's weak selection. Weekly new jobless claims fell by 18,000 to 324,000, which is the lowest level since January 2008. The weekly numbers are very volatile, and Wednesday's ADP jobs report was less than encouraging. Tonight April non-farm payrolls are released.

It also helped that there were a couple of solid corporate earnings releases. Since the GFC the mantra has been "buy American" when it comes to autos and a strong result from General Motors is testament, with its shares up over 3%. Facebook managed to silence the critics by proving it could monetise mobile advertising and its shares jumped 5.6%, providing added impetus to the tech sector and Nasdaq.

Little attention was paid to HSBC's measure of China's manufacturing PMI, which fell to 50.4 in April from 51.6 in March. The move largely matches the government's numbers, released on Wednesday, which showed a fall to 50.6 from 50.9. Australia was watching, nevertheless, and feeling less than enthusiastic. More disconcerting was a 5.5% drop in domestic building approvals, which tends to suggest a housing recovery in this country is something you can leave to your kids. In the meantime, prices will rise.

This is the RBA's dilemma. The ECB has found itself in a bit of a dilemma as well, and after months of speculation Mario Draghi finally announced a 25 basis point cut to the ECB cash rate last night to 0.5%. In his press conference Draghi channelled Ben Bernake in taking a shot at eurozone fiscal policy. The ECB president is all for austerity, but he wants to see spending cuts and not the "easy route" of tax increases, which he blames for Europe's failure to gain any economic traction. Draghi added that cheap loans to banks would continue for as long as necessary, at least until July 2014.

The ECB decision coincided with an announced fall in the eurozone manufacturing PMI to 46.7 from 46.8. Most ominously, Germany's individual PMI fell to 48.1 from 49.0.

The euro plunged 0.9% on the rate cut, sending the US dollar index up 0.7% to 82.23. Gold bucked the dollar rally and focused on yet more global easing, rising US$10.50 to US$1467.60/oz. Weak Chinese and domestic date ensures the Aussie was down 0.3% to US$1.0251.

China returned to metals markets last night and did not spark any great rally. Copper managed a less than one percent bounce, but all other base metals made further small moves to the downside. Global PMI numbers do not bode well as the northern hemisphere begins to wind down for summer. More significantly, after a three-day holiday the spot iron ore market reopened with a US$4.70 plunge to US$129.40/t.

Brent crude's little trip below US$100 has proven short-lived. In what is currently a very volatile oil market, the positive US jobs number and ECB rate cut were enough to send Brent up US$2.91 to US$102.85/bbl and West Texas up US$2.95 to US$93.98/bbl, reversing Wednesday's losses.

The SPI Overnight rose 28 points, or 0.6%.

Japan is closed today, while Australia, China, the UK and US will release service sector PMIs. The US jobs numbers are also out tonight.

Westpac ((WBC)) will report its interim profit result today and Macquarie Group ((MQG)) will release its full-year.