Week Ahead: Market Will Be Watching Europe

[Javaman]

http://www.cnbc.com/id/45531095

Markets enter the week ahead slightly more optimistic that European leaders will finally show the resolve to address their sovereign debt crisis.

That doesn't mean a major solution will be announced, but analysts are more hopeful that the European Union's leaders two-day summit will end Friday with the promise of a more powerful plan to stop the spread of contagion and the threat to the global economy.

"I think the only thing that's really significantly impacting the equity and bond market here is what's going on over there, and whether it takes a tilt to the right or left depends on whether the right set of people come out of a door and start talking," said Stuart Freeman, chief equities strategist at Wells Fargo Advisors.

The stock market gained more than 7 percent in the past week as the Fed, European Central Bank and four other central banks joined to extend swap lines and make dollar borrowing cheaper, alleviating some stress on European institutions. The S&P 500 rose 7.4 percent to 1244, its best weekly performance since March, 2009 The Dow gained 787 points, or 7 percent this week. That put the blue-chip index back in positive territory for the year — it's now up 3.8 percent for 2011. The Nasdaq gained 7.6 percent this week and the Russell 2000 jumped 10.3 percent.

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