By Greg Peel

The Dow closed down 82 points or 0.6% while the S&P fell 0.4% to 1385 and the Nasdaq lost 0.4%.

Interesting day in the local market yesterday. The ASX 200 did manage to jump 1.3% on the open, but then someone pulled out the ECG. BHP Billiton's ((BHP)) production report was so-so and brokers could have gone home at 10.30am.

It was a rare night on Wall Street last night because a whole lot of nothing happened. There were no economic data releases, there was no new word out of Europe (as we await tonight's Spanish bond auction) and nothing much else besides to cause a stampede. Hence last night was all about earnings and nothing else.

We recall that early yesterday morning in the Wall Street after-market we saw results from tech biggies Intel (Dow), IBM (Dow) and Yahoo. All three beat on the earnings line but revenues came up short. While any good news is a novelty for Yahoo, meaning its shares rallied 3% last night, Wall Street was not enamoured with the blue chips, meaning Intel fell 2% and IBM 3.5%.

With no reports from significant stocks during the session last night, Wall Street had to wait for the closing bell before Qualcomm, American Express (Dow), Yum Brands and eBay reported. In that mix we have a mobile/wireless technology company, a credit card company, what Australians would call consumer discretionary but Americans call consumer staple (Yum owns KFC and Pizza Hut), and the owner of PayPal.

Every one of the results from these companies beat on earnings and revenue. Only one company ? eBay ? is seeing its shares rally in the after-market as a result. It's up 6.5% while Qualcomm, which disappointed on guidance, is down 3.7% and the other two are down by just under 1%.

As has been noted in this Report recently, the March quarter 2012 is the first in three years in which US corporates have not been expected to post at least double-digit earnings growth. All the deleveraging, cost-cutting, asset sales and consolidation which has been the theme since 2009 has largely run its course, leaving companies to once more live or die by their natural performance.

Throughout the course of the quarter, earnings forecasts were scaled even further back, to the point where no growth was expected at all. The suggestion recently has been that forecasts were cut too far, and that "upside surprise" was in the offing. So far that call has proven relatively accurate, at least on the first 66 of 500 S&P stocks to report. "Beats" have been posted by 80% of that 66.

That indeed suggests "upside surprise", but with the S&P having run up 30% from its October lows to be only 10% below its 2007 all-time high, Wall Street appears to be looking for more than just "surprise". It wants "omigod!". Otherwise there is little impetus to keep pushing stock values higher in the near term.

So there was more selling than buying last night on earnings results, and traders ? who currently dominate the low volume market ? were squaring up after Tuesday's big rally and before tonight's Spanish bond auction. The auction is seen as a critical determinant of the next move, but let's put that into context: it's a lousy E2.5bn worth. Early Apple shareholders are worth more than that individually. The ECB has recently handed out E1 trillion in monetary stimulus. There's another E700bn-odd sitting in the various EU stability funds. Who much cares about E2.5bn?

The world cares because the result of the auction could see a sharp shift in confidence either way in the near term which could impact on the medium term. Yet Spain will have to hold auctions every month, just as everyone else does, Greece has an election coming up, no one's mentioned Portugal for a while, and so on. We keep looking at these singularities as the event which could end the European crisis, but there will always be more to come ? for years.

It's "CESCO Week" this week, which means everyone gathers in Chile to talk copper and enjoy a knees-up. This tends to drain the interest out of base metal markets for a week, which is probably why there was little movement up on Tuesday despite the big Wall Street rally and last night there was an average 1% drift-off. West Texas responded to weekly US inventory data sending its price meaninglessly down US$1.49 to US$102.71/bbl while Brent dropped, US81c to US$117.97/bbl, momentarily pushing the spread out again.

The US dollar index was steady at 79.56 and the Aussie seems currently to have settled around the US$1.0359 mark with a May rate cut considered to be in the bag. Gold fell US$7.50 last night to US$1642.00/oz.

The SPI Overnight is down 6 points.

So Spanish auction tonight, but ahead of that we have a big day in the Australian stock market. We'll see quarterly production reports from Fortescue ((FMG)), Santos ((STO)) and Woodside ((WPL)), a strategy update from CommBank ((CBA)), an investor briefing from Telstra ((TLS)), from which investors hope to learn more about a stock buyback, and an interim result from Australian Pharma ((API)).

Your Editor will be guest on Sky Business' Lunch Money today (12-1pm) and later again on Switzer TV (7-8pm).

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