By Greg Peel

The Dow fell 64 points or 0.4% while the S&P lost 0.4% to 1656 and the Nasdaq was relatively flat.

It was a subdued session on Bridge Street yesterday with the index failing to gain any traction. It is effectively the last week of the results season for the larger caps and the positive mood established earlier in the season has begun to wane as progressive reports undermine some early promise of solid results. Among stocks covered by FNArena database brokers, a report count of 165 has provided 25% beats to 19% misses, unquantified as to degree (See: FNArena Reporting Season Monitor). Yesterday's report from the struggling Boart Longyear ((BLY)) was an example of bad being quite bad indeed.

A geopolitical cloud has also moved in across financial markets this week, being evidence of the use of chemical weapons in Syria. The cloud darkened last night when, late in the Wall Street session, US Secretary of State John Kerry appeared on national television to suggest the Assad regime's actions are "by any standard inexcusable" and that the US would hold the Syrian government accountable for what is now considered irrefutable proof of the use of chemical weapons on civilian populations last week.

Up to that point trading on Wall Street had also been subdued, on low volume, as Wall Street enjoys the tail end of the summer break ahead of whatever is to transpire in September, specifically on the matter of monetary policy. The indices had been going nowhere much, but as Kerry spoke, the broad market began to fall and the Dow dropped sharply to the close.

Earlier in the day the economic news had not been good. But then bad news is not necessarily bad vis a vis taper-timing. New durable goods orders fell 7.3% in July against expectations of 4.9%. The big drop mostly reflects volatile aircraft orders, but stripping out the transport segment still left a fall of 0.6%. Year to date, durable goods orders have risen 3.3% on the same period last year which is considered modest.

In an ominous sign, the US Treasury announced last night that the US would hit its debt ceiling in mid-October. This is a more precise forecast than normally expected. And so we look forward to the return of Congress post the summer recess so we can go down that sad, frustrating path once more, of debt ceiling negotiations. Politicians at their most pathetic.

Throw in the ongoing tapering debate, and not to mention next month's German election, and we have a classic set up for those two most feared months of the year, September and October. And now we may have another war on our hands, just as we try to extricate ourselves from the last fiasco. The last thing the US needs right now, with debt ceilings in mind, is another costly war.

Such heightened geopolitical tension would also usually prompt a rally in gold and oil, but gold was already rising steadily last week and oil has been carrying an Egypt/Suez Canal premium for some time, with a touch of Syria thrown in. It must also now be appreciated that but for the right infrastructure and adaptation, the US is now effectively energy self-sufficient (if we include Canada). Last night gold rose US$6.20 to US$1404.00/oz and the oils drifted, with Brent down 31c to US$110.73/bbl and West Texas down 18c to US$106.24/bbl.

A public holiday in the UK meant the LME was closed last night, so no movements in base metals. Spot iron ore rose US10c to US$138.70/t.

Things were quiet on the currency front, with the US dollar index steady at 81.40 and the Aussie steady at US$0.9025. The US ten-year bond yield fell one point to 2.80%.

The SPI Overnight fell 28 points or 0.6%.

There are plenty of earnings reports out in Australia today, including AWE ((AWE)), Billabong ((BBG)), Flight Centre ((FLT)), McMillan Shakespeare ((MMS)), Seven Group Holdings ((SVW)) and Whitehaven Coal ((WHC)), among the many. (See: FNArena Calendar)

It should also be noted that the results season is now providing for a build-up of stocks going ex-dividend, which acts as a natural dampener on index gains.

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