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Breathe.But first, the scoreboard:

Dow: 125.67
NASDAQ: 15.21
S&P 500: +6.33

And now, the top stories:

  • Obviously the story all week has been the extraordinary volatility (each of the first four days was basically either a mini-crash or a surge). Finally that’s tapered out (just a little bit), but Europe still saw a massive surge, and the US held on for a decent rally. Click here to see some perspective on this week’s extraordinary action >
  • In Europe, regulators in four countries instituted a partial short-selling ban, and that seemed to help goose the markets to nice gains. But still, massive concerns remain. And this week saw the sharks really begin to swim around France (French banks, in particular), which means the endgame for this crisis has to be fairly near.
  • Data in the US was interesting and mixed. First we got a really strong retail sales report. Not only did it beat expectations, but prior months were revised upward, which is a big positive for the economy. Then at 9:55 markets fell a bit after UMich Consumer Sentiment came in at its lowest reading since 1980!. Those two points confirmed an ongoing trend: Sentiment is very negative, but actual real economic data (including earnings) have been decent. Something has to give.
  • The most ominous thing today: The financials. They’ve been getting killed all week, and even though the broader market was up nicely they had it rough. Morgan Stanley, especially, was sickeningly weak, falling over 6.5%. Bank of America, which lost 20% on Monday lost another 1%. Following the crisis in Europe, the return of 2008-like moves in American banks has to be among the huge worries. One thing that seems possible is that the short-selling ban on financials in Europe is prompting some to short US i-banks as a proxy.
  • Other than that, it was mercifully quiet. Very much a summer Friday.
  • Meanwhile the double dip debate rages on. Click here for the 5 signs you need to watch for >