After an up and down day on Wall Street, U.S. stocks posted modest gains Thursday on better than expected economic reports and relief over Germany's approval to expand the eurozone's bailout fund.
Experts say the widely anticipated vote Thursday by German lawmakers makes it less likely that Greece will default on its debts. And in the US, investors were encouraged by new data suggesting the world's largest economy may not be declining as fast as many had feared.
The US economy performed better than expected in the second quarter - advancing 1.3 percent from April to June, up from the previous estimate of 1 percent.
The number of Americans filing first time unemployment claims also fell sharply last week - to 391,000, the lowest in nearly six months.
The positive data gave Wall Street reasons to believe the U.S. economy may be able to avoid a second recession. But investor sentiments see-sawed much of the day on continuing pressure from overseas.
Despite relief over a majority vote by German lawmakers to increase the size and scope of the Eurozone's rescue fund, economist Stefan Bielmeier at Germany's DZ Bank says investors are looking for a more comprehensive solution.
"It's clearly a signal towards a solution of the current problem in Europe. However, it's probably not the last step towards a solution. Definitely, we need more incentives for the markets to calm down finally," Bielmeier said.
European markets saw only minor gains.
Some experts say the $593 billion bailout fund is barely sufficient to cover debt problems in Greece, Ireland and Portugal - not to mention possible aid for Italy and Spain.
Banking strategist Nick Parsons.
"Over the weekend we heard lots of talk about possibly leveraging this up to as much as two trillion euro rescue package, but of course were that to be the case, then this would have to come back to the German parliament and we'd have to go through this process once more," said Nick Parsons of National Australia Bank.
Meanwhile in Greece, the protests continued Thursday as European and IMF inspectors arrived in Athens. The inspectors will determine if Greece has made the required spending cuts to receive its next bailout installment of $11 billion.
