For Greece "the bailout bandage is on, but it won’t take much to unravel"

The long-awaited agreement on a second international financial rescue for Greece failed to inspire investors.

Instead, Wall Street looked to corporate earnings for direction.

Home Depot, Macy's and Kraft Foods delivered, pushing their respective shares higher. Earnings of Wal-Mart Stores fell short of expectations, sending its stock down more than 3 percent.

"The market is reacting to good US economic fundamentals. The earnings side has been fine. That’s providing the biggest seeds to the strength in equities,” Michael Strauss, chief investment strategist at Commonfund in Wilton, Connecticut, told Bloomberg News.

According to Thomson Reuters data, of the 418 companies in the S&P 500 that have reported earnings, 64 percent have surpassed analysts' forecasts.

In early afternoon trading in New York, the Dow Jones Industrial Average gained 0.31 percent, the Standard & Poor's 500 Index advanced 0.45 percent and the Nasdaq Composite Index rose 0.18 percent. The Dow Jones briefly topped the 13,000 level, while the S&P 500 topped its highest close since 2008.

In Europe, the Stoxx 600 index ended the session with a 0.5 percent drop for the day.

After months of arm wrestling, Europe finally signed off on a 130-billion euro bailout Greece needs to avoid bankruptcy. However, many wonder if it will be enough to prevent the country from being crushed under its debts.

"This is the most solid agreement Greece has had, with actual money behind it, and that makes the market optimistic," Phil Flynn, senior market analyst at PFG Best in Chicago, told Reuters.

There are still significant obstacles ahead. The Greek parliament is to vote on the accord later this week.

"If you say this is definitely the end of the story, then that shows you're not familiar with the history of the issue," Flynn said. "We're cautious optimistic, but we're not likely to move significantly higher from this point since we've rallied going into it."

Analysts warned that the euro zone's troubles are far from over as there's still plenty of risk.

“The bailout bandage is on, but it won’t take much to unravel,” David Miller, partner at Cheviot Asset Management in London, told Bloomberg. “The euro zone has done its best to ensure that Greece will deliver on promises, but there is considerable scope for backtracking on deficit reduction.”

For now, the euro gained against the greenback and the Japanese yen, last up 0.1 percent to US$1.3257 and 0.2 percent higher to 105.71 yen.

Italian and Spanish bonds strengthened as well. The yield on Italy's 10-year bond fell four basis points to 5.44 percent, while the yield on Spain's 10-year bond dropped five basis points to 5.11 percent.

(BusinessDesk)