By Greg Peel

The Dow rose 138 points, or 0.9%, while the S&P gained 0.8% to 1651 and the Nasdaq added 0.9%.

If you listen to anyone interviewed on US business television this week you'll note that about half of them are completely convinced the Fed will not announce any tapering tonight and the other half are completely convinced some form of tapering will be declared. A few in between suggest Bernanke will be typically coy, providing some sort of ambiguous "we will do what we have to" comment.

Whatever the case, such polarisation means there's little point in debating the topic at this eleventh hour. What we do know is that the tapering debate has sparked rampant volatility ? the Dow has moved up or down by triple digits six sessions in a row, which hasn't happened since the 2011 US credit downgrade ? exacerbated by thin markets in which journalist opinions have sparked fight or flight responses, and by computer algorithms that mine news stories looking for keywords to trigger buying/selling. The humans have mostly stayed on the sidelines, but despite the uncertainty, the S&P 500 is a mere 2% below its all-time high.

Which begs the question as to which way Wall Street will run on either outcome, taper or not. What we also can assume from language used recently by both Chairman Bernanke and President Obama is that Bernanke will stand down once his tenure expires in 2014, having already stayed in the job longer than he had intended. Some are using this knowledge as a reason to assume tapering will indeed be announced, given Bernanke is unlikely to want to depart not having signalled an end to what he has controversially started.

There was little impetus for last night's triple-digit Dow rally other than Fed expectation. The sessions' data releases showed US housing starts were up 6.8% in May, short of analyst expectation after a big drop in April (apartments are the lumpy element) and building permits were down 3.1%, as expected. The headline CPI rose 0.1% in May after falling 0.4% in April, while the core rate rose 0.2% to sustain a subdued trend of 1.7% annual inflation. No real surprises there.

The next question is how the Australian stock market might respond to whatever tonight's outcome might be. Yesterday we again saw a substantial sell-off and turnaround, with the banks again sought at solid yields, and even consumer discretionary finding support. The Aussie is down again, off 0.8% over 24 hours to US$0.9485, so perhaps we are seeing the foreigners continuing to exit and the locals waiting for the right time to come in and snap up the bargains.

The US dollar index was again little changed last night, at 80.65, while the gold market decided that the Fed is indeed likely to announce tapering, or at least no one wants to hang around to find out. Gold fell US$17.10 to US$1368.50/oz. The US bond market was steady.

Traders on the LME cited the weak US housing starts and permits data as a good enough reason to sell, with all metals lower and copper down 1.4%. Oil traders cited escalating Syrian tensions as no reason to be short, so Brent is up US42c to US$106.02/bbl and West Texas is up US67c to US$98.44/bbl.

Spot iron ore continues to rally back from the brink, rising US$2.70 yesterday to US$117.70/t.

The SPI Overnight is up 35 points or 0.7%, but as I noted yesterday the SPI's crystal ball is pretty cloudy at present. The June contract expires tomorrow so there could be some rollover argy-bargy going on, not to mention scrambling from option market-makers in these volatile times.

Now we wait.

Rudi will appear on Sky Business at 5.30pm.