By Greg Peel

The Dow closed down 25 points, or 0.2%, while the S&P lost 0.3% to 1408 and the Nasdaq fell 0.3%.

Much speculation arose from yesterday's local inflation figures, which showed a 1.4% jump at the headline against expectations of 1.1%, taking annual inflation to 2%. It was the biggest jump in some time and the first to take account of the carbon tax, which economists estimated was worth an extra 0.3-0.4ppt. All talk now is of the RBA not cutting its cash rate in November as has been widely expected.

However, such speculation ignores the fact the RBA does not factor the headline measure in its policy, but rather uses its own core reading that excludes energy and food. Outside of soaring utility prices, vegetables were a major source of price increases. The RBA measure rose only 0.8% to a seasonally adjusted annual rate of 2.5%, which is smack bang in the middle of the central bank's target zone. The board has taken account of the carbon tax in its policy setting, which is strictly a one-off exogenous cost-jump reminiscent of the introduction of GST. If the RBA is planning to cut rates on Cup Day, the inflation numbers should not change the board's mind.

The result nevertheless was taken by forex traders as possibly killing off a cut, as the Aussie is up 0.8% to US$1.0338, however we have to also take account of yesterday's flash estimate of China's October manufacturing PMI from HSBC. It rose to 49.1 from 47.9 in September, suggesting the pace of contraction in China's manufacturing sector is continuing to slow and is now close to bottoming. This news was fuel for the Aussie, and prevented a potentially weaker day on the bourse following on from Wall Street's dour earnings-based session overnight.

On the subject of US earnings, last night's highlight was a surprise beat from Dow Chemical, the shares of which rose 5% in the session. Boeing (Dow) also posted a healthy result. And can we still call it "Faceplant"? The ubiquitous social media leader saw its shares rally a full 19% following Tuesday evening's late report as the company proved it could actually book sales after all. Facebook is not yet included in an index, however.

The scorecard for the earnings season indicates 70% of the 187 S&P 500 stocks reporting to date have beaten earnings forecasts. This result seems at odds with Wall Street earnings-based pullback over the week, but the truth lies in the 60% of those companies who missed on revenue forecasts, as well as the significant number that revised down fourth quarter and/or 2013 guidance, or spoke anecdotally of a weaker outlook. And while we're now through most of the Dow names, we're still short of the broad market half-way point for the season.

The rest of the season will play out as the other big domestic distraction sets Wall Street's mood ? that of the election only two weeks away. It seems too close to call at this point so Wall Street will potentially fluctuate with every little nuance and poll result (Romney equals good, Obama equals bad), and perhaps more than a few hours will be needed to extract a result. Watch out for hanging chads.

The election then leads us to the edge of the fiscal cliff, which was an overhanging factor for the Fed policy meeting of the last two nights. The mid-afternoon statement was, as expected, little changed from September's QE3 statement, but Wall Street is looking ahead to the December meeting at which time the election result will be known, the cliff will look like either an abyss or a ditch, and a decision will be made regarding the year-end expiry of Operation Twist. Do we see QE4? Or perhaps just a new QE3 model with turbo charger.

Also under speculation now is whether or not Ben Bernanke ? Uncle Ben, hero to many on Wall Street ? will make himself available for another term as Fed chairman. Rumour has it he may stand aside if Romney wins, handing over to a more hawkish committee member to cope with a new Republican regime. Or he may stand aside regardless, having probably aged about twenty years in the last five. Who'd blame him?

Speaking of the US economy, it was revealed last night that sales of new single-family homes in the US rose 5.7% in September ? the biggest jump since April 2010 when the government's tax credit incentive was about to expire. Prices of new homes are up 11.7%, annually, but we remember for a long time builders couldn't give them away. The housing data, and the slightly better earnings results, allowed Wall Street a bit of a breather following Tuesday's big slide, albeit disappointment from those for some reason expecting more from the Fed provided for a late drift-off.

The US dollar index closed relatively flat on the session at 80.00, while gold traded briefly below 1700 before managing to rescue itself for a US$1701.60/oz close, down US$5.00. Base metals had a quieter session on small, mixed moves. Brent crude fell US40c to US$107.85/bbl, while West Texas seems determined to test longstanding support levels but falling US$1.06 to US$85.61/bbl.

Spot iron ore rose US$1.20 to US$118.70/t.

The SPI Overnight fell 9 points or 0.2%.

Highlights on the domestic stock front today include the full-year result for ANZ Bank ((ANZ)), quarterly retail sales figures from Wesfarmers ((WES)), a production report from Beach ((BPT)), an update from Mirvac ((MGR)), and the BHP ((BHP)) AGM in London tonight.

The UK will estimate its September quarter GDP tonight, while the US will assess durable goods orders.

Rudi will not be appearing on Sky Business today, and indeed not for a month as he heads off on assignment to Singapore and the US.