By Greg Peel

The Dow rose 114 points, or 0.8% to 15,024, while the S&P gained 0.6% to 1613 and the Nasdaq added 0.8%.

This Report has pointed out more than once that despite Ben Bernanke recently suggesting a possible timetable for QE tapering and interest rate increases, the suggestion did not represent a shift in Fed policy from earlier in the year. It was made in a statement read at his press conference, in line with a move by the Fed to be more transparent, and not in the official Fed monetary policy statement. That statement has not wavered these past months from the insistence that monthly bond purchase volumes will be incrementally reduced if the US economy continued to meet Fed forecasts, but also maintained or even increased if it did not.

Last night New York Fed president and known hawk, William Dudley, warned that assumptions of an imminent rise in US rates "would be out of synch with both FOMC statements and the expectations of most FOMC participants". A rise in short-term interest rates, said Dudley, "is very likely to be a long way off", and any decision to start tapering bond purchases "depends on the outlook rather than the calendar".

The Atlanta Fed president also echoed Dudley's words last night, suggesting markets had mistaken Bernanke's intentions and reiterating that Fed policy will be flexible and based on economic conditions. On Wednesday the Richmond Fed president had his say, offering his expectation that the US economy would remain lacklustre for a few more years.

"Misinterpretation" is the buzzword from the Fedheads. The Fed can just as easily giveth as it can taketh away, depending on economic data.

On that basis, the pullback on Wall Street since May and particularly in June has been misguided, driven by panickers and computers. The pullback has nevertheless been welcomed by most as a long needed blow-off of over-enthusiasm, returning stock valuations to slightly more realistic levels. Similarly, the big sell-off in US bonds is now overdone, say many, and current yields are offering an attractive point at which to buy. Last night the US ten-year yield fell 6 basis points to 2.48%.

The rebound rally in stocks has continued, with the S&P 500 now back over 1600 and the Dow last night reclaiming 15,000. Last night also produced more positive data releases, again confirming that good news is good news and bad news is good news too.

The US pending home sales index jumped 6.7% in May to a six-year high, and a year on year growth rate of 12.1%. Recent Fed interest rate hike fears have pushed up mortgage rates, prompting buyers to jump in lest fixed mortgage rates run away. Personal spending rose 0.3% in May, reversing April's equivalent fall. Incomes rose 0.5%.

Given incomes rose faster than spending, the implication is an increase in household savings, which is not quite as encouraging. Nor does the rate of spending growth stack up as well when inflation adjusted, leading some forecasters to lower their June quarter GDP growth expectations to 1.5% following on from March's 1.8%.

But never mind, Uncle Ben is always there to help out if needs be. And general expectations already had June being a soft quarter before a pick-up in the second half of the year.

The US dollar index was steady at 82.93 last night and the Aussie is steady at US$0.9284. The gold rout continues nevertheless, with another US$26.40 fall to US$1200.60/oz and a brief period spent under the 1200 mark. That mark is not technically significant, merely a round number.

Lead and nickel decided to rebound somewhat on the LME, up around 1% each, but all other metals were as good as unchanged last night.

The oils otherwise looked to positive US data and more easing of tapering fears (and hence fears of a rising greenback) and broke out of their recent stasis last night. Brent gained US$1.00 to US$102.66/bbl and West Texas gained US$1.26 to US$96.76/bbl.

Spot iron ore rose US$1.50 to US$115.30/t.

The SPI Overnight closed up 22 points, or 0.5%.

Today is the last day of the financial year in Australia, which may have some impact on the market. There could be last minute tax selling and profit-crystallising going one way and fund manager window dressing going the other, so it's not easy to pick. Tonight in the US represents the end of quarter at least, and again there may be some push and shove. How things open on Monday will be more indicative, and next week is an abbreviated week on Wall Street, punctuated by Independence Day on Thursday.

The reinstatement of Kevin Rudd will also add an element of fresh uncertainty on Bridge Street and among businesses now given a sliver of doubt has now crept in to a previous widely held assumption that Abbot would romp it in September. Stock markets are typically apolitical, but do not appreciate uncertainty brought about by a lack of clarity on an election date, or on just who might win and what policies they will offer up in an attempt to triumph.

Japan will provide a monthly data dump today, including inflation data which will be closely watched for signs of a turnaround.