Dow +67.21 at 12640.78, Nasdaq +33.33 at 2892.42, S&P +9.51 at 1335.02

Broad market trade began the week in a relatively choppy, lackluster manner. Participants generally shrugged off news that early election polls in Greece pointed to a preference for the country's pro-austerity party. The apparent indifference came as precarious conditions in Spain took the yield on the country’s 10-year Note back above 7%.

Stocks advanced 1% on Tuesday for their strongest performance of the week as market participants prepared for announcements from the Fed scheduled for the following day. The effort gave the stock market its first finish above its 50-day moving average in more than a month.

Data featured a housing starts number for May that hit an annualized rate of 708,000, which is a little light relative to the rate of 719,000 that had been generally expected. However, the prior month figures were revised upward to reflect an annual rate of 744,000 housing starts.

Building permits climbed from the prior month's upwardly revised rate of 723,000 to 780,000 for May to best the pace of 725,000 that had been expected, on average, among economists polled by Briefing.com.

Although most of the market’s focus was on forthcoming Fed commentary, JPMorgan Chase (JPM 35.99, +0.48) CEO Jamie Dimon provided participants with some theater by returning to Capitol Hill for a testimony to the House Financial Services Committee. Nothing was stated that deviated from comments made to the Senate Banking Committee last week. FedEx (FDX 90.54, -0.09) posted an upside earnings surprise, but issued downside guidance, while Oracle (ORCL 28.00, +0.19) had an in-line outlook on better-than-expected earnings.

On Wednesday it was all about the Fed. The latest FOMC Directive moved to extend "Operation Twist" through the end of the year in an effort to extend the average maturity of the Fed's securities holdings. Fed Chairman Bernanke stated that additional asset purchases would be considered by the Fed if necessary, but many participants had hoped for more from the Fed this time around, especially in light of the Fed’s lackluster forecast for 2012.

The Fed now expects real GDP growth for 2012 to range from 1.9% to 2.4%, down from the range of 2.4% to 2.9% that was previously projected. Unemployment for 2012 is now expected to range from 8.0% to 8.2%, which is up from the previously forecasted range of 7.8% to 8.0%.

Corporate news was overshadowed, though it featured a disappointing forecast from Procter & Gamble (PG 59.83, +0.08) and word that JPMorgan Chase exited some 65-70% of its losing position. Discover Financial (DFS 33.61, +0.16) served up in-line earnings and guidance that helped earn it favorable reviews from a few analysts.

Perhaps it was a delayed response to the Fed’s Directive and forecast, or maybe it was disappointing economic data, but stocks fell more than 2% on Thursday for their worst single-session slump since December.

Prior to the open market participants learned that China’s PMI manufacturing report pointed to an eighth consecutive month of contraction. Germany, Europe’s most diverse and robust economy, also posted a disappointing number that pointed to tighter activity. Domestic data featured a Flash PMI Manufacturing of 52.9 – the worst reading in 11 months. The Philadelphia Fed Survey fell unexpectedly to -16.6 for June. It was its worst reading since August 2011.

Existing home sales set an annualized rate of 4.55 million units during May, as had been generally expected, but the pace was stronger in the prior for month when it registered a rate of 4.62 million units. Leading Indicators for May increased by 0.3%, which is better than the flat reading that had been widely forecasted to follow the 0.1% decline in the prior month.

On Friday stocks fought to recover some of their prior session losses. The effort concluded with the three major equity averages at or near session highs with varied gains. The Nasdaq outperformed its counterparts with help from some large-cap Tech players. Blue chips fared less well, hampering the Dow.

Headlines were relatively light, but news that analysts at Moody’s downgraded credit ratings several banks created some buzz. Despite the action, shares of banks and diversified financial services players attracted buyers, such that the KBW Bank Index climbed in excess of 1%.

All 10 major sectors settled in positive territory. Utilities were at the bottom end of things as market participants showed little interest for the defensive-oriented sector. It advanced just 0.1%.

Small-cap stocks scored particularly strong gains, as measured by the Russell 2000, which settled higher by about 1.4%. The annual reconstitution of the Russell Indices took place today.

Volatility cooled considerably amid the generally improved tone. In fact, the Volatility Index fell about 10% after it had spiraled higher in the prior session.

Nasdaq 100 +1.1%. ..S&P Midcap 400 +0.6%. ..Russell 2000 +1.4%.