The
Dow Jones Industrial Average returned to the black last week, as stocks surged
3.6%, a testament to the fact that markets move on whispers from all corners of
the globe, now more than ever.

Not
only do investors need to watch the political machinations in Greece these
days, they have to care about how many Big Macs people are eating in China. The
answer: not enough. On Friday, McDonald’s (ticker: MCD) said sales in China
fell last month, and analysts blamed it on low consumer confidence.

China clearly recognizes the slowdown,
which is why the government cut interest rates on Thursday. In a week when
investors were fixated on what central banks might do to stimulate the markets,
China’s cut was the only real action.

Elsewhere,
the merest hint on Wednesday that the European Central Bank is open to cutting
rates—and news that some Fed officials are ready to act—sent shares rocketing.
The Dow jumped 286 points, its largest one-day gain this year, and finished the
week up 435.6, at 12,554.2.  The Dow index posted its biggest weekly gain
of the year.

The
Nasdaq Composite added 110.9 points, or 4%, to 2858.42. And small-cap stocks,
as measured by the Russell 2000, rose 4.3%, to 769.17.

Are
traders getting ahead of themselves? Probably. Fed Chairman Ben Bernanke didn’t
sound particularly excited about using the Fed to shock the market back to life
when he spoke before Congress on Thursday.

“I
think people are putting way too much emphasis on boilerplate language coming
from the Fed,” said Brian Jacobsen, chief portfolio strategist at Wells
Fargo Funds Management. “So the chairman said they’ll ‘support the
economy.’ Of course they’re going to support the economy.”

The
FOMC won’t meet until June 19. That’s the same week of the Greek elections,
meaning investors get to ruminate again in the coming week.

That’s
not to say that next week will be a dull one. China is set to release data on
Saturday about retail sales and industrial production. This week’s rate cut
makes it apparent that the data will be disappointing, Jacobsen predicted. But
the fact that they didn’t cut rates by more than 25 basis points, to 6.31%,
indicates that it’s also unlikely to be disastrous.

European
Union officials will also hold a conference call on Saturday where Spanish
officials are expected to announce whether they need a bailout.

“The
markets are going to react on Monday even though it will be a quiet day on the
news front,” Jacobsen said
(Source:  Barrons Online).