By Greg Peel

The Dow closed up 18 points or 0.2% while the S&P managed only a 0.07% rise to 1078 and the Nasdaq notched 0.1%.

Trading in Australia yesterday was just about as quiet as it ever gets, and things weren't much different on Wall Street last night. The bottom line is we've had the Europe/China/slowing US economy sell-off, we've had the bounce-back out of oversold conditions, and now we want the score card. The world awaits the flow of second quarter US corporate earnings results to provide a guide as to where stock valuations actually should be. Consensus is for net 27% earnings growth over the second quarter 2009.

So apart from a slight blip down in the morning, Wall Street remained flat all day knowing that Alcoa would not release its result until after the bell. There is nothing particularly special about aluminium producer Alcoa – it just happens to be the first Dow stock to lead off each quarter's result season. In actual fact there have already been other results.

The highlight of these in last night's pre-close session was railroad CSX which reported an earnings increase of 36% over last year's second quarter, beating the Street on both the top and bottom lines. Transport stocks are always considered a good indication of how an economy is performing.

But CSX was not enough to move a market poised for blue chip results. Just after the bell, Alcoa reported earnings per share of US13c on revenue of US$5.2bn compared to a loss of US47c in June 2009. The Street had estimated US12c and US$5.05bn respectively, so we're off to a good start. Alcoa shares are up 3.4% in the after-market as I write.

Tomorrow's big release is Dow stock Intel.

Alcoa's result probably explains why the SPI Overnight, which closes one and a half hours after the NYSE in the winter months, is up 16 points or 0.4% compared with little movement from Wall Street's day session.

But returning to what did happen while stock traders twiddled their thumbs, perhaps the bond market was the centre of attention.

Firstly, Greece announced that its budget deficit for the first half 2010 had fallen 46% below that of the first half 2009. Athens' target is to reduce its 2010 deficit by 40% over 2009 to 8.1% of GDP. So one assumes it's on track. It must be, because Athens also announced it would auction US$1.25bn of 26-week bills tonight – its first foray back into the market since going on an EU/IMF emergency drip. The government must be confident, because a failed auction would be a disaster.

The US Treasury auctioned US$35bn of three-year notes last night. The bad news, from a stock market perspective, is that the auction settled at the lowest yield in history (1.055%). This implies that US and global investors are still happier to invest in safe haven assets at negative real interest rates and not in risk assets such as stocks, despite the recent stock market bounce. Demand was slightly stronger (3.2 times auction amount) than in the previous four three-year auctions.

The good news is that the Treasury has been gradually reducing its auction amounts over the past months, down from record high numbers in 2009. This was the least number of threes auctioned all year. So perhaps one might attribute high over-subscription to less supply. Foreign central banks bought 40%, down from a running average of 50%. A while back this would have been considered a worry, given the US needs offshore lenders. But at this stage less demand means less fear, particularly over Europe.

In other news, the UK saw the release last night of its final first quarter GDP result. The final figure had been delayed by two weeks due to the discovery of an error in the calculation process. In the end, the result came in at 0.3% growth – exactly as it was at the last revision. However, the error meant that in the FY09 recession the UK GDP contracted by 6.4% instead of 6.2% as previously thought.

Not exactly stuff to shoot yourself over, but the pound did trade lower last night, as did the euro, sending the US dollar index up 0.2% to 84.26. The Aussie slipped slightly to US$0.8759.

Lord knows what's going on in gold at the moment. For the last few sessions it has simply battled back and forwards around the US$1200 level by around US$10-15 a day, which seems a lot in historical terms but is only about 1%. The only conclusion is that gold is simply “doing some work” at this psychological level before it makes up its mind for the near term. At this stage, such a battle implies the next move is likely to be down.

The LME is now officially feeling the effect of the summer slowdown, creating light volumes and little conviction. Thus last night's rise in the US dollar was enough to send the metals down 1-2%. Ditto oil, which fell US$1.14 to US$75.91/bbl.

There is a growing belief that a successful plugging of the Gulf oil spill – which might happen as early as next week – would be just the fillip the financial markets need (earnings season aside). It would at least take one item off the long list of current woes.

So that's about it for last night. Tonight sees Intel after the bell so it might be another quiet one on Wall Street, unless traders see Alcoa as sufficient stimulus out of 500 S&P stocks. This will be a long process.

Today in Australia we learn the results of NAB's latest monthly business conditions and sentiment survey, and ERA ((ERA)) will release its quarterly production result.

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