By Greg Peel

The Dow rose 103 points or 0.8% while the S&P gained 0.7% to 1372 and the Nasdaq jumped 1.1%.

Recent up-days on Wall Street have usually started as down-days, or at least resulted in a recovery from an earlier dip. Not so last night, as indices rallied from the opening bell. There was mostly good news to be had, beginning with Fed chairman Ben Bernanke's second day of testimony to the Senate Finance Committee.

On Tuesday, Bernanke offered nothing new in airing his frustration over a sluggish US recovery and reiterating the Fed's readiness to provide more stimulus if things deteriorated. Wall Street wasn't sure whether this was good news or bad news, even though it was old news, but decided in the end to buy. Last night Bernanke drilled down a bit further to address a fundamental issue, the lack of jobs growth. The Fed is not sure if US employment is "stuck in the mud", but if it is, this is what Uncle Ben had to say:

"I don't want to imply that we've done everything we can. We may do more in the future. It may be possible that we will take additional action of we conclude we are not making progress towards higher levels of employment".

At the same time, Bernanke suggested the Fed did not see a double-dip recession ahead, just further moderate growth. So if we add it all up, the Fed is not about to roll out QE3 at this stage as it does not see economic contraction ahead, but it is worried specifically about jobs growth and if that is not happening then some form of measure will be taken. It may not be full-blown QE3 (expanding the Fed balance sheet by buying longer dated US Treasuries) but it will be something "unconventional".

So is this good news or bad news? Good enough, one might suspect. It was notable, nevertheless, that as Bernanke spoke while the Fed's six-weekly Beige Book was released, and it marked a pullback in earlier "moderate" growth on a net regional basis. Three regions reported a slowdown this time, up from only one last time.

Any economist will tell you, however, that it's all about jobs and housing. Unemployment and lack of job confidence flow through to lower house prices. But despite a stagnant employment market, the US housing market continues to show positive signs. Last night it was revealed housing starts jumped 6.9% in June to the fastest pace since 2008, including a 4.7% jump in single family homes. This news provided an added fillip for Wall Street, albeit every silver lining has a cloud, and in this case building permits ? the leading indicator for starts ? fell 3.7%.

Never mind, there was also more good news in the earnings front. Tech stocks led the charge, with Intel a stand-out and IBM following up with a positive result after the bell. Bank of America also beat the Street, but mostly on provision fiddling as it turned out. All up, the second week of earnings results is proving a lot less gloomy than the first. But there's still a way to go.

Over in Europe ? yes we haven't heard much out of Europe lately, which is ominous ? the German parliament is set to vote on whether or not it wants to bail out Spanish banks. This should be no problem given Merkel's numbers and the fact, believe it or not, that she has actually risen in popularity with the German electorate of late. One might have expected the average German to resent any concept of bailing out those bludgers to the south and thus expected Merkel's polls to plummet, especially after provincial trouncings last year. But no, they've gone the other way. Perhaps the average German now realises the benefits of the world's most significant currency manipulation. Forget China and its pegged currency ? the euro is the greatest thing that ever happened to the likes of BMW, Karcher and Siemens.

Perhaps exploiting this popularity swing, Merkel is back in fighting mode having recently been forced into a back-down on strict eurozone austerity. The Italian and French leaders are calling for Germany to underwrite eurozone debt but Merkel has spat back and told them how about you guys work a bit harder towards a solution instead of waiting for unconditional assistance. Go Angie.

The rally on Wall Street was somewhat unusual last night, as for once it did not reflect a rally in the euro. The US dollar index is steady on 82.97. Gold has slipped back another US$8.90 to US$1573.50/oz and the Aussie is seriously back in rally mode with another half cent gain to US$1.0366.

Base metals barely troubled the scorer last night, while oil-wise it was Wednesday night, which means a spin of the US inventory chocolate wheel. Ticker ticker ticker ticker down! Brent rose US$1.53 to US$105.16/bbl and West Texas added US71c to US$89.93/bbl.

The SPI Overnight was up 35 points or 0.9%.

NAB will provide a summary of local June quarter business confidence today, while it's also time to turn on the gas with production reports from Santos ((STO)) and Woodside ((WPL)). PanAust ((PNA)) will also report.

US earnings highlights tonight include Morgan Stanley and Dow components Microsoft, Travelers and Verizon, while data highlights will be existing home sales and the Philly index.

Rudi will appear on Sky Business today at noon.

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