After five weeks in a slump, US investors turned their backs on more worrisome news from Europe and poor US economic data to deliver the markets their best week so far this year.
With Spain's banking sector plunging into crisis mode, Greece edging toward June 17 make-or-break elections, and China acknowledging its sharp slowdown, the US dollar and US stocks appeared to be two of the few choices investors were ready to play with.
"It may not feel like it, in the wake of last week's disappointing jobs report and the subsequent market plunge, but the major averages posted their best week of 2012, ending with another up day," Charles Schwab & Co analysts said.
"As Spain's economic issues remain in the headlines and Greek elections (are) slated for next week, the Street was expecting some heavy selling this afternoon, with traders wanting to avoid holding onto anything over the weekend. But that didn't happen," said Ryan Detrick of Schaeffer's Investment Research.
The numbers were solid: the Dow Jones Industrial Average of 30 blue chips gained 3.58 per cent for the week to 12,554.20; the broader S&P 500 did better with a 3.73 per cent gain to 1,325.66; and the tech stock-heavy Nasdaq outperformed both with a 4.04 per cent rise, to 2,858.42.
The return to bullishness pulled the Dow back into the black for the year, after it closed out the previous week underwater for the first time since January 1.
Besides the eurozone crisis, investors shirked off both the Federal Reserve's dull report on regional economies and also Fed Chairman Ben Bernanke's failure to give any hint of more stimulus for the economy.
But China proved encouraging, cutting its key interest rate for the first time since 2008, by a quarter-point, signalling that the government was ready to battle the slowdown and help the global economy.
"China... is coming off of a two-year tightening cycle, with ample room to ease. As such, we expect China's central bank to ease further to complement a ramp-up in fiscal stimulus," said economists Paul Edelstein and Nigel Gault at IHS Global Insight.
That move helped China-sensitive stocks like commodities and some industrials.
But banks were the big winners for the week: Bank of America surged 7.7 per cent, Wells Fargo 4.2 per cent, JPMorgan Chase 5.5 per cent, and Citigroup 9.4 per cent.
Boeing picked up 4.0 per cent; Wal-Mart jumped on Friday on strong sales in Mexico to end 4.1 per cent higher for the week; Home Depot climbed 9.2 per cent; Ford rose 5.3 per cent, and Disney 4.1 per cent.
In tech stocks, Intel and Hewlett-Packard each leaped 5.0 per cent, Apple 3.5 per cent, Microsoft 4.2 per cent, and Oracle 4.5 per cent.
The coming week offers data releases that will fill out the picture of the US economy but might not clear up the direction.
"The state of the economy depends on who you ask," said analysts at Wells Fargo Securities.
In addition, the situation of Spanish banks could still hang over the markets, and the countdown to Greece's June 17 election, which could set the country's fate inside or outside of the eurozone, will begin.
"The global financial fallout could be significant" if Greece pulls out, said Wells Fargo.
Indeed, Moody's warned on Friday that a Greek pullout could possibly result in a credit downgrade of Europe's strongest economies, including Germany.
US data releases covering May next week include the producer price index (Wednesday); retail sales (Wednesday); consumer prices (Thursday) and industrial production (Friday).
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