On June 29, stock surged to close out a sour quarter on a high note as investors welcomed an agreement by leaders of Europe for stabilizing the region's banks, a pact that helped remove some of the uncertainty that has plagued the markets.
"You are going to be see a nice summer rally out of this. Think of where this market would be if it hadn't been for the euro crisis," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont. "The market is now looking at least six to eight months forward on what is the economic landscape going to look like in an improving European growth environment." "You have more fireworks coming next week when the ECB meets on the fifth because I have to believe they are going to cut their interest rates by at least a half to stimulate growth," Mendelsohn said.
Leaders of the eurozone agreed that countries would be able to recapitalize banks on a direct basis without increasing the budget deficit of a country. This move creates a catalyst for snapping the cycle that markets fell into when policymakers bailed out Spanish banks with $125 billion.
The Dow Jones industrial average .DJI jumped 277.83 points, or 2.20 percent, to 12,880.09 at the close. The Standard & Poor's 500 Index .SPX rose 33.12 points, or 2.49 percent, to 1,362.16. The Nasdaq Composite Index .IXIC climbed 85.56 points, or 3.00 percent, to 2,935.05.
For this week, the Dow Jones 1.9 percent, the S&P 500 rose 2 percent and the Nasdaq advanced 1.5 percent; the Dow however fell 2.5 percent, the S&P 500 lost 3.3 percent and the Nasdaq dropped 5.1 percent for the second quarter.