Market Preview: The Return of the Bazooka

NEW YORK (TheStreet) -- Looks like the bazooka is back in play.

Most of Thursday's session was in keeping with the seesaw action that's dominated on Wall Street all week but the late surge to new highs for the day was brought on by a Reuters report that the central banks of the world's major economies stand ready to provide the liquidity to stabilize the financial markets if the outcome of Greece's elections this weekend proves overly disruptive.

That's about as a big a cushion as investors can expect to have at this point. If Greece does ultimately leave the eurozone, it's still going to be a messy affair fraught with contagion risk for the other teetering member countries, Spain, Italy etc. But this report suggests that officials are at least contemplating the scope of the cooperation necessary to really confront the enormity of the problem.

Even before the Reuters report came along, the idea that the Federal Reserve plans to step up with additional accommodation at its policy meeting next week was being treated as a foregone conclusion by an increasing number of market watchers.

Credit Suisse weighed in on the subject early Thursday, saying it expects the central bank to come through with an extension of Operation Twist, its $400 billion bond maturity extension program that is scheduled to expire at the end of the month.

"We would characterize any Fed action as an exercise in risk management," the firm said. "That is, Fed officials probably will choose to lean against the downside risks to economic activity that have been intensifying since their April 24-25 meeting."

Another round of quantitative easing though is a bridge too far, Credit Suisse said.

"A third round of outright asset purchases (QE) is so contentious within the FOMC and the broader political environment that the Committee will likely avoid such a move unless economic or market conditions deteriorate markedly from this point," the firm wrote, adding later: "The FOMC majority does not believe the Fed is out of bullets. On the contrary, we believe the Committee will vote to ease again after determining that the net benefits of more accommodation outweigh the potential costs."

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