Previous research using picture/word matching tasks has demonstrated a tendency to incorrectly interpret phrasally stressed strings as compounds. Using event-related potentials, we sought to determine whether this pattern stems from poor perceptual sensitivity to the compound/phrasal stress distinction, or from a post-perceptual bias in behavioral response selection. A secondary aim was to gain insight into the role played by contrastive stress patterns in online sentence comprehension. The behavioral results replicated previous findings of a preference for compounds, but the electrophysiological data suggested a robust sensitivity to both stress patterns. When incongruent with the context, both compound and phrasal stress elicited a sustained left-lateralized negativity. Moreover, incongruent compound stress elicited a centro-parietal negativity (N400), while incongruent phrasal stress elicited a late posterior positivity (P600). We conclude that the previous findings of a preference for compounds are due to response selection bias, and not a lack of perceptual sensitivity. The present results complement previous evidence for the immediate use of meter in semantic processing, as well as evidence for late interactions between prosodic and syntactic information. (Contains 5 figures and 5 notes.)