By Greg Peel

The Dow closed up 8 points or 0.1% while the S&P added 0.2% to 1308 and the Nasdaq gained 0.4%.

It was a case of ups and downs on the newsflow for Wall Street last night as the buyers and sellers fought hard to stay either side of the flatline. Ahead of the opening bell the ADP private sector jobs report was released for February and showed an increase of 217,000 jobs compared to consensus expectation of 180,000.

With the oil price stable at that point, and following Tuesday's big drop, the buyers re-emerged to send indices higher. But while the ADP report should provide an opportunity to readjust forecasts for the non-farm payrolls report due on the Friday, for the last few months it has proven misleading. (Which is not to say ADP has it wrong, given the often wild revisions made to official data in subsequent months.) Economists have thus left their consensus forecast for Friday's number at 189,000 new jobs.

The positive bias continued until late morning when the news broke that the Libyan oil distribution port of Brega, near Tripoli, had become a scene of battle between government and opposition forces. Stock indices reversed as West Texas oil shot up suddenly, and it has closed the session up US$2.60 to US$102.23/bbl. By midday stock indices were lower on the day.

Brent crude nevertheless remained fairly subdued on the news, currently up only US48c to US$115.78/bbl. WTI is still trying to close the yawning gap to the more relevant oil price, but last night it was announced inventories at the delivery point for WTI in Cushing had hit an all-time record.

Suffice to say the buyers fought back, heartened by the second day of testimony from Ben Bernanke to the Senate committee. Bernanke suggested the current oil price spike should only prove temporary and that inflation should not be impacted. Why the Fed chairman is seen as an expert in oil markets is anyone's guess.

But again stock prices began to fall into the afternoon, and this time it was the Fed's anecdotal survey of economic activity across the twelve regions – the Beige Book – which brought the buyers back in. The survey showed economic growth across all regions was “modest to moderate”, which compares to previous months when “modest” was about as good as it got. Retail sales were up in ten of twelve regions, while factory activity was up in eleven.

What was interesting, however, was specifically noted concerns about inflation from manufacturers in particular. Those manufacturers have been passing on higher input prices more and more to retailers, and retailers say they have or soon will be passing on price hikes to consumers. The question is: will consumers pay up?

While the Fed continues to dismiss the headline elements of inflation, currency markets do not expect the European Central Bank and the Bank of England to do the same. The US dollar index fell 0.5% last night to 76.66, returning to the thesis that America's trading partners will raise rates long before the Fed does. The Aussie was steady at US$1.0171 despite economists warning of a negative Q1 GDP in the wake of yesterday's Q4 release.

Gold was steady at US$1434.40/oz and base metals were also little changed as they mimicked the indecision in stock markets.

The US bond market did not dismiss inflation last night, and Beige Book talk was enough to send the ten-year bond yield up seven basis points to 3.47% on the inflation trade.

By the end of the Wall Street session, stocks had waned once more to provide only a small change on the close. It was a session of consolidation and indecision as traders dealt with data locally and events internationally. If a reporter shoved a microphone in a trader's face right now he would probably say, “Y'know, all credit to the boys an' that. We're just going to take it one game at a time”. The VIX volatility index is sitting on 20 – the supposed level of demarcation between complacency and uncertainty.

The SPI Overnight was up 18 points or 0.4%.

Tonight the world will be watching the ECB as it makes a rate decision. While economists do not yet expect a rise from 1.0%, Trichet's comments on inflation will be closely monitored.

Rudi will be making a regular appearance on Lunch Money today at noon on the Sky Business channel.

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