A tentative deal by EU leaders for a pact on region-wide fiscal discipline — with Britain excepted — gave a boost to US markets on Friday, allowing the markets to end another rocky week in the plus column.
Stocks had bounced around all week on worries about the “make-or-break” eurozone crisis summit and dropped sharply on Thursday as it opened amid worries of a possible flop.
The result on Friday, in which all 17 eurozone countries and most of the non-euro EU countries signed on in principle to the prospective region-wide budget rules, was enough to turn around sentiment.
The Dow Jones Industrial Average closed up 1.37 percent for the week at 12,184.26, the broader S&P 500 gained 0.88 percent to 1,255.19 and the tech-rich NASDAQ Composite added 0.76 percent to 2,646.85.
There was still some nervousness about the deal in the markets.
“The devil is in the details, and there, the details, we do not know everything,” Gregori Volokhine of Meeschaert said.
However, positive economic data helped overcome the worries for many.
“A run of better-than-expected US economic data in recent weeks raises hopes that the domestic economy might somehow defy gravity and expand quickly, even as the rest of the world seems to be coming to terms with an environment of slower growth,” economists at Wells Fargo Securities said.
Financial shares bounced around during the week on eurozone worries, finally ending up around 9 percent.
Energy shares were flat on conflicting currents in the markets: Worries about more US and European pressure on major producer Iran pushed prices higher, while signs of a slower global economy — especially in big oil consumers China, Brazil and Europe — holding prices back.
In the upcoming week the aftermath of the less-than-successful EU crisis summit will overhang the market, with analysts anticipating a possible downgrade of 17 eurozone countries, including France and Germany from Standard & Poor’s.
Also looming is the battle between Republicans and Democrats on extending programs of US payroll tax cuts and extended unemployment benefits that expire at the end of the year.
Failure to extend both, essentially taking money out of the hands of households, could slow the economy, while it remains weak, economists say.