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Market Preview: A Deal in the Works

NEW YORK ( TheStreet) -- It's getting hard to keep track but it seems like market expectations for the big eurozone summit just went from nothing to something.

The major U.S. equity indices all significantly pared their losses late in what was a mostly terrible session for stocks on Thursday without a clear catalyst for the turnaround in the final hour.

The credit now is being given to good old-fashioned media speculation that the eurocrats may actually leave Brussels with some kind of compromise stimulus package in place. German Chancellor Angela Merkel, who holds all the cards at this confab, canceled a press conference late in the day, adding fuel to the fire.

The latest rumblings appear to be coalescing around a roughly $150 billion stimulus package to help out the weakest member countries within the single-currency bloc.

There is some jockeying going on apparently though as Spain and Italy are reportedly insisting on measures to provide quick relief from rising short-term borrowing costs that Germany is hesitant to sign off on.

The negotiations are expected to continue late into the night, so there's really no telling what headlines Wall Street will wake up to. It certainly seems like a deal is in the works, and now the market is betting on the emergence another "kick the can down the road"-type agreement at the very least.

After Thursday's recovery -- the Dow was able to recoup 150 points off its low -- a package could very well be greeted with a classic "sell the news" reaction. Then again, the eurocrats showing some facility for compromise and a big fat number in the billions attached to a stimulus package will give the bulls some credibility to maybe run stocks up again ahead of second-quarter reporting season, which will quickly gain momentum after Alcoa (AA) kicks thing off on July 9. The big banks -- JPMorgan Chase (JPM), Bank of America (BAC - Get Report) etc. -- will follow shortly thereafter, giving traders of all stripes plenty of numbers to chew on.

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