Wall Street finished with modest gains after Europe fell, so you’d expect there to be a solid reason for the confidence. And our market followed with an 80 point gain in early trading.

Well, Europe fell because the European Central Bank changed tack on interest rates and left the impression that the next move would be a cut, following the Bank of England which cut rates overnight by 0.25% to 5.25%.

The cut and looming chop in Europe, plus the cuts in the US and Canada show just how out of step we are here after this week’s rise and strong hints of at least another one to come. But the US market reaction was more of one of those gentle upward moves by a bear market because the economic and business news wasn’t good.

The US Senate passed a $US167 billion ($A186.71 billion) spending program designed to try and ease the impact of the slowdown with a mixture of tax rebates and other help.

The 81-16 vote ended more than a week of political manoeuvring that ended only when Democrats dropped their demand that the proposal offer jobless benefits, heating aid for the poor and tax breaks for certain industries. Republican senators blocked those ideas, but agreed to rebates for older people and disabled veterans.

In fact there’s a strengthening suggestion that the economy did slump badly in January, after the sharp fall in December and there’s now a stronger feeling that the US housing industry hasn’t reached bottom and will face another year of falling prices, demand and losses.

The housing market has still not reached bottom, the number of workers drawing jobless benefits has hit a 2-1/4-year high and consumers are keeping wallets and bank accounts shut as leading retailers like Wal Mart, Target and JC Penny reported worse than forecast sales figures for January. Their shares rose because US punters reckon that’s the bad news out of the way.

The US National Association of Realtors said pending sales of previously-owned homes fell by 1.5% in December and were down 24% from December 2006. But more important the Association of US real estate agents changed a forecast last month on house prices to one where it is now seeing them worsen for the second year in a row, instead of flattening out.

The Association is forecasting a 1.2% drop in prices of existing homes sold this year, instead of being flat with chances of are bound in the back half. They were also forecasting that the first quarter would see a record 5.3% drop from year ago levels. Now it’s expecting the current quarter to see even a larger decline in prices of 6.1%.

According to realtors the media price of existing US houses fell 1.4% last year, the first full year fall in its survey’s history.

The US Labor Department said new claims for unemployment aid edged down from a two-year high last week but the number is now at a level not seen since October 2005 in the aftermath of Hurricane Katrina.

Tech heavyweight Cisco Systems warned of slowing orders at from US business.

Wal-Mart, the world’s biggest said sales rose just 0.5% instead of the 2% expected by analysts; Target, the No. 2 US retailer, posted a 1.1% drop in same-store sales.