By Greg Peel

The Dow closed up 55 points or 0.4% while the S&P gained 0.4% to 1698 and the Nasdaq added 0.8%.

Bridge Street succumbed to Wall Street's lead only briefly yesterday before grafting back all session to turn losses into gains. The ASX 200 has proven resilient in the face of a five-day losing streak for the S&P 500 ? the longest this year ? with the materials sector again leading the gains yesterday on increased iron ore and base metal prices. The US losing streak was broken last night, and with the overnight futures pointing north further gains are possible today on Bridge Street unless the Friday factor seeps in.

Wall Street actually shot up on the open last night, sending the Dow up over 100 points. As for why, well the market is rather difficult to interpret at present.

New jobless claims were shown to have fallen a better than expected 5,000 to 305,000 last week. This is a positive on the one hand, but economists suggest that number has to get below 300,000 to suggest sufficient progress in job creation. The first revision of the US June quarter GDP matched the initial estimate at 2.5%, which was below the 2.7% expected. Again ? we can say the revision disappointed or we can say a number above 2% is reasonably healthy at this stage.

So what, here, is worth 100 Dow points? Did traders see the numbers as positive, or did they see them as negative and thus supportive of a delay to tapering? Either way, any renewed exuberance was shot down when Republican House majority leader John Boehner spoke up to declare that his party would push a bill that will tie the passage of funding and an increase in the debt ceiling with further cuts in federal spending. The indices swiftly reversed course almost back to the flatline.

Thereafter things bungled along for a while until late in the session when Democrat Senate majority leader Harry Reid suggested his party would have a stop-gap budget bill finished by Sunday, ahead of Tuesday's funding deadline. The indices kicked to the close.

The Senate's proposal to put up a "stop-gap" implies the Democrats are not expecting any swift compromise and resolution between the Republicans and the Administration. An interim bill would simply allow more time for an ongoing arm wrestle without a government shutdown. Most on Wall Street believe a compromise will ultimately be reached, but not before a mandatory locking of horns. Volatility is thus expected between the October 1 budget deadline and the October 17 debt ceiling deadline. The sticking point will clearly be Obamacare.

So Wall Street has moved on from discussing the tapering issue to discussing politics, and will be beholden to the argy-bargy from here.

The US dollar managed to rise last night by 0.3% to 80.54 and the reversal in stocks was matched with a reversal in bond yields, with the ten-year yield rising 3bps to 2.64%. Gold dutifully fell US$8.80 to US$1324.20/oz and the Aussie is down slightly at US$0.9358.

Despite the weaker dollar, buyers entered the base metal market ahead of quarter-end and sparked some short-covering. Copper rose 1%. The same was true of the oil market, which has also seen a losing streak. Brent rose US$1.32 to US$109.21/bbl and West Texas rose US26c to US$102.92/bbl.

Spot iron ore was unchanged at US$133.80/t.

The SPI Overnight closed up 10 points or 0.2%.

Industrial profits data are due from China today while Japan will release its monthly CPI. Personal spending and income data and consumer sentiment will give Wall Street something to think about tonight ahead of a weekend that will likely see plenty of politicking.

All good fun, I'm sure.