By Greg Peel

The Dow closed up 23 points or 0.2% while the S&P gained 0.4% to 1767 and the Nasdaq rose 0.2%.

Bridge Street opened to the upside yesterday on Wall Street's lead but quickly became undecided on what to do next. Clouding the issue were, funnily enough, some rather positive economic data releases.

Capital city house prices in Australia rose 1.9% in the September quarter having risen 2.7% in June, and were up 7.6% year on year. Economists were stunned by a 0.8% rise in retail sales in the month of September, double expectation. ANZ's job ad series showed a drop of 0.1%, but this implies a slowing in the pace of falling ad numbers. And the TD Securities inflation gauge for the month showed a paltry 0.1% gain for a 2.1% annualised inflation rate.

The inflation gauge provides scope for the RBA to cut further. But that's about where the story ends. No one was expecting the central bank to reward mortgage holders this particular Cup Day but there has been a lingering expectation another cut or two may be forthcoming next year. But the strength of house prices (asset inflation) and of retail sales (CPI inflation) would tend to suggest otherwise. And the unemployment scare may be diminishing.

Suffice to say that while the Aussie jumped again on easing expectations of another rate cut, the stock market fell. Or perhaps traders were just trying to square their books ahead of today's frivolities. It's one of those weeks where not much happens in the market anyway ? checking the form on Monday, drunk on Tuesday, hangover on Wednesday. Bring on the weekend. Get used to it. The Christmas party season now begins.

It must be said that while the retail sales growth number offers up all sorts of economic hope, it's a complete furphy. The bulk of the increase was posted by department stores, and came off a very low base of near death experience. Sales are rising but prices aren't, so discounting remains the order of the day. The figure does not include domestic on-line sales (the GDP component number does), so is far from a representative picture in today's world. Offshore on-line sales are not counted, of course.

Bridge Street has had a good run, and perhaps it's time some profits were booked. Witness Westpac ((WBC)) yesterday.

Lingering around the fringes yesterday was also a re-emergence of Fedspeak. Lord please take me now, I thought we were over this. In a moment of profound clarity, St Louis Fed president James Bullard said the Fed didn't have to start tapering because US inflation is so low, but then it might. Speaking in Sydney, Dallas Fed president Richard Fisher said it might, because the central bank should not be hamstrung by fiscal risks.

Cheers. Suffice to say Wall Street ultimately did a whole lot of not much last night, falling early on taper-talk but subsequently grafting back. The only economic release of the day, factory orders, came in on expectation.

The euro managed to stage a slight recovery last night after last week's big fall on European deflation fears. The eurozone manufacturing PMI showed a rise in October to 51.3 from 51.1, which provided some comfort. The US dollar index thus fell 0.2% to 80.55. Gold was steady at US$1315.50/oz but the Aussie shot up again on local data and diminishing rate cut expectations. It's up 0.8% to US$0.9515.

The base metals market offered up the clearest indication of renewed tapering fear. All the metals fell a percent or more. The oils were otherwise benign, with Brent rising US26c to US$106.23/bbl and West Texas falling US11c to US$94.50/bbl.

Spot iron ore rose US50c to US$135.80/t.

The SPI Overnight rose 18 points or 0.3%.

It's service sector PMI day today, with numbers due for Australia, China (HSBC), the UK and US. The RBA will meet today and while no change is expected, the statement will be closely scrutinised.

Not unsurprisingly, there are no local corporate events or reports today. Watch for not much to happen on Bridge Street, particularly after lunch.

Each year I try to pick a horse based on some sort of vague market connection. This year, lacking much choice, I have decided to pick Foreteller as a tribute to Bernanke's decision not to taper ahead of the shutdown.

Behave yourselves.