There has been a good bit of drama surrounding the EU Summit, yet one probably knew from past experience going into these "make or break" meetings not to expect anything less.

Cutting to the chase, the market rocked on word late yesterday that an agreement had been reached on establishing a closer fiscal union and issuing a banking license to the ESM.  That enthusiasm didn't last long, though, as the market soon got rolled on a subsequent headline that Germany did not support the latter proposal.

The S&P 500 ended Thursday down 2.1%.

Today the press of speculation should be quieted, as the European Council, and not some news agency anxious for a scoop, has published a statement detailing the outcomes of the summit.

Briefly, it is being reported that 23, and likely as many as 26, members of the EU have signed on to the new agreement.  The one, notable holdout is the U.K., which withheld its support over a financial transaction tax proposal and the notion of ceding ground on maintaining fiscal sovereignty.

The remaining members, meanwhile, were in agreement that automatic sanctions should be enforced in the event a member state has a budget deficit that exceeds 3% of GDP; that a new fiscal rule of balanced budgets should be introduced in national legal systems at constitutional or equivalent level; that the ESM should enter into force by July 2012; that the EUR 500 bln limit for the ESM will be reviewed in March 2012; that euro area and other member states will consider, and confirm within 10 days, the provision of additional resources for the IMF of up to EUR 200 bln in the form of bilateral loans; and that the involvement of the private sector will strictly adhere to the well established IMF principles and practices.

Other provisions were explained more fully in the European Council document, which can be accessed here.

Market participants, it seemed, embraced the outcome, as the S&P futures moved roughly 20 points off their overnight lows.  However, the embrace feels more like a hug you would give your aunt than it does like a hug you would give your main squeeze.

The S&P futures are up three points at the moment and are trading 0.5% above fair value.  That isn't such a bad thing, but considering the expectations in front of the summit and the selloff late yesterday when it sounded like things might fall apart, it is not exactly an indicator of unbridled enthusiasm.

Ironically, earnings news, which has been largely ignored in the face of the debt crisis, is playing a part in the tempered response.

Dow component DuPont (DD), Texas Instruments (TXN) and Altera (ALTR) all cut their guidance below the Capital IQ consensus estimates since yesterday's close, citing weakening demand.  These warnings have resonated given that all three companies derive at least 60% of their revenue outside the U.S.

On a related note, the U.S. trade deficit narrowed from an upwardly revised $44.2 bln in September to $43.5 bln in October (Briefing.com consensus -$44.0 bln).

Both imports and exports declined from September by $2.2 bln and $1.5 bln, respectively.  The fact that imports declined by more than exports accounts for the contraction in the deficit; however, it is worth noting that a drop in imports of crude oil and petroleum products accounted for 83% of the drop in imports while a drop in exports of nonmonetary gold accounted for 79% of the drop in exports.

In other words, the October trade balance report is not signalling a disconcerting decline in global demand.

The preliminary reading for the December University of Michigan Consumer Sentiment report (Briefing.com consensus 65.1; prior 64.1) will be released at 9:55 a.m. ET. 

That could shake things up a bit, but the real driver is going to be the developing sentiment pertaining to the outcome of the EU Summit.  Our initial impression is that it was neither a make or break outcome, meaning the eurozone debt saga is likely to continue to lead to volatile trading conditions.

--Patrick J. O'Hare, Briefing.com

Patrick J. O'Hare is Chief Market Analyst for Briefing Research, Briefing.com's institutional research service. To request a free trial, please email researchsales@briefing.com.