By Greg Peel

The Dow closed down 31 points or 0.3% while the S&P lost 0.5% to 1334 and the Nasdaq fell 0.8%.

When the Oracle from Omaha speaks, Wall Street listens. Ahead of last night's open Warren Buffet told CNBC weak demand globally is hurting his investments in retail, jewellery, carpet and other businesses, with business in Europe dropping sharply over the past two months.

Relief following the EU summit is becoming but a distant memory, and the ECB's perceived failure to do enough on the monetary policy front continues to weigh on Europe. Spanish and Italian bond yields continue to drift northward, while the euro sinks slowly into the Mediterranean. Euro weakness has pushed the US dollar index to a 52-week high this week, with the basket ticking up another 0.16% last night to 83.62. Wall Street is also disappointed to date over the Fed's apparent reluctance to flag QE3.

US quarterly earnings seasons over the previous two years have shown strong growth ? mostly double digit ? and a lot of that success was due to a weak US dollar under the influence of QE. With the dollar reversing in 2012 as euro-woes come to a head, the lost competitive advantage combined with the global slowdown have seen US corporate earnings offshore take a beating. The June quarter season has not started well, with lesser names forming a parade of profit warnings and downside surprises despite forecasts having been severely marked down in the lead up to this week.

Last night hotel owner Marriott and insurance company Progressive both took a hit on poor results. Supermarket operator Supervalu announced a big drop in income and suspended its dividend. A consumer staple without a dividend? Supervalu shares fell 49%. Ford (Dow) joined the party, warning of steep offshore losses, particularly in Europe, and guiding to a much bigger net loss in the June quarter than analysts had been expecting.

The earnings season is still but a pup, and from tonight we see the big names begin to roll out as JP Morgan (Dow) reveals all. There remains a feeling on Wall Street that not all will be bad, but it's a case of so far not so good.

Now that we have moved into the second half of the year, the US "fiscal cliff" ahead is looming larger. Many companies have put off the thought of hiring new workers not because of a tepid US recovery, they say, but because of uncertainty over upcoming taxation changes and other fiscal impacts. It's a lose-lose for the current Administration, as on this basis jobs growth will not be apparent ahead of the election unless fiscal measures can be bedded down. It matters less whether those measures are good or bad ? it matters more that companies know with certainty where they stand. But with the election not due until November, the uncertainty has only just began.

There was nevertheless some good news on the US jobs front last night, if one takes weekly new jobless claims as any sort of viable indication. They fell 26,000 last week to 350,000 ? the lowest since March 2008. These numbers are notoriously volatile, but last night's release was enough to halt the plunge on Wall Street. From the open, the Dow fell 112 points.

Thereafter began a grafting rally back to positive territory as traders sought out defensive stocks such as large healthcare, utility and consumer staple names. Dow components Merck and Proctor & Gamble led the way. Wall Street could not quite hold on to positive territory and sagged towards the closing bell. We must remember, of course, that volumes have been paltry this year and are even worse now the summer holiday period is in full swing.

Markets elsewhere were more subdued last night, with one notable exception. Yesterday the Aussie lost a bit of its safe haven lustre after the local jobs report and is down over a cent to US$1.0140. Monthly Australian jobs numbers are no less volatile and unpredictable than US weekly or monthly data, and it should have come as no real shock that after a couple of months of upside surprise we had a downside surprise to help even the score. One only needs watch the news to hear of rolling job losses across the country, but at the end of the day (and at the risk of unintentionally supporting the ranting of politicians), 5.2% is not exactly the stuff of recession. Both Costello and Keating would have called it "full employment".

The stronger greenback continues to weigh on commodity prices, with base metals again quietly dipping last night. Gold was also off a tad to US$1572.20/oz but the oil market saw a quieter session for once, with West Texas little changed at US$85.76/bbl and Brent actually up US84c to US$101.07/bbl.

The SPI Overnight closed flat.

It's Chinese GDP day today, which given the lead-in data and Beijing's preemptive rate cut, may provide more fodder for global gloom. Economists are looking for a number under 8%.

Happy Friday the Thirteenth.

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