By Greg Peel

The Dow closed up 56 points or 0.6% while the S&P gained 0.6% to 1071 and the Nasdaq added 0.9%.

After Friday night's big fall, the Dow opened around 50 points higher. At that point the National Association of Home Builders released its industry sentiment index which showed a fall from 16 in June to 14 in July – the lowest level since April 2009. The Dow fell back to be slightly negative.

It is not clear why this number should be a shock, given recent US housing data have been nothing but poor. Wall Street nevertheless began to fight back, took some heart from earnings reports including that from construction services company Halliburton, which is embroiled in the oil leak mess. A good result had Halliburton shares up 6% and the rest of the sector following along.

News on the oil leak dominated the afternoon session. It had previously been noted that the oil field was seeping some 3km from the wellhead, and later it was noted there was also some seepage from the cap itself. But late news that the distant seepage in question was unrelated to this particular well provided some relief. The White House has given BP another 24 hours of test time to deal with the seepage at the well head.

Wall Street kicked to the close, but shortly after the bell the much anticipated result from IT giant IBM was released. As was the theme begun on Friday with all of Citi, Bank of America and GE, IBM beat on earnings but fell short on revenue forecasts, even though revenue was up 42% on the June quarter last year. IBM shares are down 4% in the after-market.

Then came competitor Texas Instruments, which matched earnings forecasts and missed revenue consensus by a whisker. But now in a negative mood, Wall Street wanted a clear “beat”. TI shares are down 6% in the after-market.

The IBM result does not bode well for the Dow tonight, given IBM represents 9.7% of the average. A 4% fall in IBM shares is 35 Dow points, and that's before you add in the likes of components Hewlett Packard, Intel and Microsoft with possibly sympathetic falls.

While the blue chips dominate the early reports in the season, the number of stocks reporting really hots up this week. So while IBM has provided a weak lead, tonight, both before and after the bell, reports will include those from Apple (second biggest US company by market cap after Exxon), Goldman Sachs, Johnson & Johnson (Dow), State Street, Bank of New York Mellon, Whirlpool and Yahoo.

Traders will buy one day and sell the next depending on each day's earnings reports. Clearly the investor is best served waiting for a trend to emerge. So far the trend is revenue misses, with the exception of Intel, but it's still early days.

The euro put in a strong performance last night, slipping only slightly against the US dollar despite some negative news. Last night Moody's downgraded Ireland's debt by one notch, and the EU and IMF suspended emergency funding to Hungary until such time as it can prove it is working to reduce its deficit. That emergency funding has been in place since 2008 – it is not recent as one might assume. But the Irish downgrade came as little surprise, and a kick in the backside for Hungary can also been seen as a positive.

The US dollar index was little changed at 82.67, and the Aussie little changed at US$0.8684. Gold, however, broker its backwards and forwards trend around the US$1200 mark last night by falling US$8.80 to US$1184.10/oz.

I have been suggesting lately that gold probably needs to go lower. The recent push to new highs above US$1250 was based on concern of risk in Europe, a reflection of the euros needing to be printed to finance the bail-out fund, and an assumption the euro would trend down to below US1.20 and perhaps even towards parity. But that hasn't happened.

Instead, the crisis in Europe appears to be abating and the euro has risen back to US$1.30. In the meantime, weak US economic data have swung the spotlight onto increasing confirmation of a deflationary environment in the US. Deflation is not good for gold. And while the US dollar has thus fallen recently, which should be positive for gold, unwinding of gold positions against the euro have been the leading negative factor. Between now and the fourth quarter, there is no support from Asian jewellery demand.

What may yet turn gold around is the possibility of renewed fiscal stimulus from a US government worried about housing and unemployment, or renewed monetary stimulus which the Fed is already discussing. This week Ben Bernanke makes his regular testament to both houses of Congress, so some clues may be provided.

Commodities were otherwise quiet last night, with oil falling US51c to US$76.54/bbl and base metals reflecting the summer wind-down as well as a flat dollar by moving very little.

The US ten-year bond yield pushed back up 4 basis point to 2.96% last night, but the IBM result may change that again tonight. While the company's revenue miss can be attributed to some extent to a weaker euro over the quarter, IT-spend from US companies is an important bellwether of economic health.

The SPI Overnight fell 3 points.

Watch out for the minutes of the July RBA meeting out today, a speech by Glenn Stevens, and a production report from Iluka ((ILU)).

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