By Greg Peel

The Dow closed down 10 points or 0.1% while the S&P lost 0.4% to 1287 and the Nasdaq dropped 0.4%.

Investors who bought the Australian market up big-time yesterday will be disappointed with last night's response on Wall Street, no doubt expecting a solid gain on the debt ceiling news. Aside from passage through the House remaining a potential stumbling block, debts and deficits are really not the main issue at present.

As some once said, it's the economy stupid.

News on a compromise in the Senate did prompt Wall Street to open higher, by 140 Dow points, but a cloud remained over the possible response in the House. Suddenly that became academic, nevertheless, when the US manufacturing PMI was released. Let's run through the global round of manufacturing purchasing managers' index releases over the last 24 hours.

Australia's PMI crashed to 43.4 in July from a brief flirtation with expansion in June at 52.9. China's result matched the earlier HSBC flash number in falling to 49.3 from 50.1. Indeed the whole world slowed, with the eurozone falling to 50.4 (52.0), the UK to 49.1 (51.4) and then the big one ? the US fell to 50.9 from 55.3 when the market had expected 54.9.

In June, the manufacturing sectors of all five regions were expanding, as was Japan's, but recovery from the earthquake is currently distorting that number. In July, only two of five regions expanded, and only by the barest of margins. And despite the fact the US manufacturing sector represents only 20% of US output, it is the world's biggest economy which still provides the biggest global impact.