U.S. Stock Market
To say the once-proposed Greek referendum on its bailout package has unnerved investors would be an understatement. Where are the Dow Jones Industrial Average and other equity-market indices headed next week? REUTERS

U.S. stock investors have had to take their own self-help course on living with uncertainty due to Europe's crisis, and they may need to draw on that next week because it is completely unclear when the next upheaval will come.

Sentiment will probably receive a boost after Greek Prime Minister George Papandreou won a parliamentary confidence vote early Saturday.

The vote helped the cash-strapped country avoid snap elections that would have destroyed its bailout deal and turned up the flames on the Eurozone's economic crisis, though risks to the global financial system remain.

Greece is still in turmoil. Papandreou signaled he would still stand down, calling for a new coalition to ram the bailout deal through parliament and keep the nation from going bankrupt.

Other challenges haven't gone away, such as keeping countries like Italy from going the way of Greece. So, while investors may cheer the Greece vote, two years of crisis have taught them to be vigilant about new risks emerging from Europe's debt debacle.

It takes away the risk of a referendum or renegotiating new terms. Net-net, it's a 'risk-on' event, Thomas Roth, executive director of U.S. government bond trading at Mitsubishi UFJ Securities USA in New York, said about the Greece vote.

How much you can rally on this? It may be temporary at best. You have still have a lot of risks like Italy. We just don't know ... All in all, it's a slight positive for stocks and a slight negative for bonds.

Although investors are cautious, stocks may be able to keep in place the recent upward trend as more evidence suggests the U.S. economy is progressing despite Europe's woes.

Friday's U.S. monthly jobs report suggested some improvement in October, even though the headline payroll numbers appeared weaker than expected.

What I'm seeing at the moment is that investors are getting more reassured with the picture that the U.S. may actually do OK despite the troubles in Europe, said Natalie Trunow, chief investment officer of equities at Calvert Investment Management in Bethesda, Md., which manages about $13 billion.

The more recent data points on the U.S. economy and earnings profiles are supporting that assertion, she said.

Stocks ended with losses for the week.

But last Monday, the benchmark Standard & Poor's 500 index posted an 11 percent gain for October, its best monthly percentage rise since December 1991.

With results in from some 433 of the S&P 500 companies, 70 percent have beaten forecasts on third-quarter earnings, defying views that growth would be hit by the problems in Europe and a slower economy in China.

Analysts have said earnings growth has helped to support the market and has taken some of the focus away from Europe, even if just momentarily.

More reports are expected next week, including those by several retailers like Macy's Inc., whose results could shed some light on how the holiday shopping season may go.

If there isn't a lot of resolution on the European front, some of the big company earnings could be market movers. There are a lot of positives about the U.S. economy, and strong earnings are one of them, said Rob Morgan, chief investment strategist at Fulcrum Securities in Philadelphia.

Europe Still Cause of Volatility

Still, strategists see plenty of volatility ahead, making any big moves hard for short-term investors.

The CBOE Volatility index fell 1.1 percent to close at 30.16 on Friday, but the VIX is well above levels from just last summer. It was trading near 20 in early August.

On the week, the VIX rose 22.9 percent following wide market swings in four of five trading sessions.

It's all Europe all the time unless we hear otherwise. The underlying tone and theme in the market will be set in Europe until or unless there's some finality to the debt crisis, said Steve Sosnick, equity risk manager at Timber Hill/Interactive Brokers Group in Greenwich, Conn.

Similarly, options strategist Frederic Ruffy of WhatsTrading.com, a Web site headquartered in New York, said, Investors wait to see whether Greece will implement tough and unpopular austerity measures to avoid a messy debt default.

By taking a longer-term approach, though, some investors have been able to see the current situation as a buying opportunity, analysts said.

Stock valuations are cheap, so if earnings hold up, investors are likely to be better positioned in stocks than in bonds or cash, they said.

The S&P 500 forward price-to-earnings ratio is now at 12, its lowest in years.

Savvy investors are using the dips to put some money to work, but this is a very difficult market if you're a short-term trader, said Fred Dickson, chief market strategist at the Davidson Cos. in Lake Oswego, Ore.

Besides earnings, U.S. economic news has helped keep worries about another recession at bay.

Nonfarm payrolls rose a tepid 80,000 in October, below economists' expectations. But employers added 102,000 more jobs than previously estimated in August and September.

And the U.S. unemployment rate slipped to 9 percent. It had been stuck at 9.1 percent for three straight months.

Among key economic reports next week are the government's data on the consumer price index and producer price index.

(Reporting by Caroline Valetkevitch; Additional reporting by Ryan Vlastelica, Doris Frankel and Edward Krudy; Editing by Jan Paschal and Burton Frierson)