By Greg Peel

The Dow fell 70 points or 0.5% while the S&P lost 0.6% to 1646 and the Nasdaq dropped 0.2%.

Bridge Street held up pretty well yesterday in the face of a weak Wall Street and big dividend drops from Commonwealth Bank ((CBA)) and Telstra ((TLS)), with healthcare, supermarkets and energy the prime drivers. There'll be plenty more ex-divs to come in the next couple of weeks but on the flipside, the Australian result season is drawing local focus away from the tiresome US tapering debate. With 64 stocks covered by FNArena database brokers now reported, the FNArena Reporting Season Monitor is showing a beat/miss ratio of 20:12, with the balance largely in line with expectations. There's a-ways to go yet.

Wall Street remains under pressure in the meantime. As we approach September and what it might bring, investors around the globe have decided the risky trade is to stay long US bonds. The Fed may not begin tapering next month but it will sooner rather than later, so why hang about? The benchmark ten-year yield rose another 6 basis points to 2.88% and the talk is that 3% could really send stocks into a tailspin.

On the other hand, a suggestion is this panic sell-off in bonds is now overblown and the response in stocks is one offering good entry levels for the next leg up. Volumes remain summer-thin nonetheless, meaning those looking to buy are happy to stay on the sidelines, or the beach, for the moment. Wall Street tried to open higher last night for no particular reason and then drifted on lack of interest to the close.

Realistically there's been no new news on tapering for a while now beyond the confused ramblings of junior Fedheads, and amidst speculation as to who the next Big Kahuna might be come 2014. Just to confuse further, the Fed's Jackson Hole gathering is on later this week and it is here Bernanke chose to reveal QEs 2, 2.5 and 3. It would be a logical venue from which to announce QE tapering, except that Ben's not going to Jackson Hole this year.

The US dollar is still not doing much throughout this bond sell-off, with its index down a tad to 81.25 last night. Gold has been going up so last night it went down, by US$11.40 to US$1365.80/oz.

Indeed it was a session in which all commodities turned tail after recent comeback strength. Short-covering appears now to have run its course in London, with base metals all weaker last night and copper down 0.8%. The oils also fell for once despite ongoing issues in Egypt, with Brent down US50c to US$109.90/bbl on the new October delivery front month and West Texas down US47c to US$106.99/bbl.

The Aussie has been subject to a bit of short-covering of late as well, pushing back above 92 in yesterday's local session, but last night succumbed once more and fell 0.8% to US$0.9112, with lower commodity prices likely the trigger.

Spot iron ore has recovered from Friday's fall however, rising US$1.30 to US$139.20/t.

Can Bridge Street hold up again today despite Wall Street? The SPI Overnight fell 17 points or 0.4%. But the SPI Overnight does not know what reporting wonders might materialise today.

On that score, we'll see Ansell ((ANN)), Arrium ((ARI)), BHP Billiton ((BHP)), Coca Cola Amatil ((CCL)), Monadelphous ((MND)), Oil Search ((OSH)) and QBE Insurance ((QBE)) among many more, while National Bank ((NAB)) will provide a quarterly update.

For all report release dates refer to the FNArena Calendar.

NOTE FROM THE EDITOR

Economic data have started to surprise on the upside, including recent PMI surveys and Chinese indicators. This has prompted suggestions from the more optimistic forecasters that global growth is looking in much better shape for the second half of the calendar year. If correct then the recent switch into resources stocks will have further to run.

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