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Europe’s fiscal pact may save the euro from collapse and stave off worldwide financial panic. But the concerns of many investors are more personal: Will it lift my flagging 401(k)?

The answer from the stock market on Friday was hopeful. As a summit of European leaders concluded with an agreement to deal with their debt crisis, the Standard & Poor’s 500 index rose 1.7 percent, capping a second straight week of gains.

Then again, stocks have rallied after other summits _ more than a dozen in two years _ only to fall again. And the reaction to the deal from even the optimists isn’t particularly reassuring.

Hank Smith, chief investment officer of Haverford Investments, says stocks could rise “sharply and quickly” _ but only if there’s more “good news” from Europe. And that assumes you agree that Friday’s deal was good at all.

In that deal, all 17 countries that use the euro agreed to allow a central European authority to oversee their future budgets. They also agreed to automatic penalties if they spend too much.

But the deal won’t help cut debt today, which in Italy, Greece and Spain has driven government borrowing costs close to levels considered unsustainable. All eyes are now on the European Central Bank, and whether it’s willing to buy enough national bonds from those countries to keep interest rates down.

The frustration for investors is that Europe has drowned out a string of good news in the U.S. that should have moved stock prices higher. U.S. companies are making more money than ever, signs are growing the economy is recovering and stocks are cheap compared with earnings.

So far this year, investors have endured stomach-churning moves up and down in stocks. But in the end, not much has changed.

The S&P 500 has barely budged in the past 12 months. The Dow Jones industrial average, which includes some deeply troubled financial stocks not in the S&P, has performed better _ up 5 percent.

Jim Russell, equity strategist at US Bank Wealth Management, is befuddled.

“Stocks are bad _ sell them,” he says, mocking the prevailing attitude in the markets. “It doesn’t matter if you blow out earnings.”

Russell is hoping that Europe’s latest deal means U.S. investors will forget about the region for a while, focus on the fact that big U.S. companies have increased profits by double-digit percentages for 10 consecutive quarters _ and maybe even start buying again.

But the only thing he’s convinced is sure to come is more wild stock moves.

Since August, S&P 500 stocks have gyrated by 1.7 percent a day, more than twice its average over two decades. The Dow index of blue chips stocks has seen similar volatility.

The culprit: Europe.

Early last month, the Dow plunged by 389 points on news that squabbling Greek politicians might not be able to push through needed reforms. A few days later, the Italian Senate passed a new austerity budget and the Dow rose 260 points. Then it dropped 326 points over two days on fears that U.S. banks had bet too heavily on Europe continuing to pay its bills and on news of a sudden spike in Italian borrowing costs. Then, another reversal. Several central banks announced they would make it easier for European lenders to borrow themselves, and the Dow jumped 490 points fast cash advance.

In addition to tighter controls on spending, Europe’s new “fiscal compact” calls for the launch of a permanent eurozone bailout fund in 2012, a year ahead of schedule. The deal also will send 200 billion euros ($267.41 billion) to the International Monetary Fund, which controls another emergency fund for countries in crisis.

Jeffrey Sica of Sica Wealth Management thinks the pact is inadequate, and stocks could fall 15 percent once investors wake up to that fact. He doesn’t think the European Central Bank will buy enough bonds to keep borrowing costs down. And that means banks in the region holding government debt will suffer big losses, with some collapsing. U.S. banks will also get hit with losses, and the economy will struggle for years.

“We had all this anticipation leading up to the meeting,” he says. “But nothing much happened.”

Sica, who manages $1 billion for clients, sold all of his stocks in August, and put proceeds in U.S. Treasury bills and into so-called “short” bets that stocks will fall.

His view is a nightmare, but even if you don’t buy it, there is plenty to worry about.

U.S. companies have generated record profits in part by cutting costs. But there’s a limit to how much they can squeeze suppliers and pile work on remaining workers. The other path to riches has been to sell more abroad, but there are signs that may prove difficult soon, too.

This past week, Europe’s biggest economy, Germany, reported its exports plunged in October. That followed bad news from a widely-followed survey suggesting that eurozone economy had likely contracted last month, which would make it the third monthly drop in a row. Many experts now think Europe is already in recession or will soon enter one.

This matters because S&P 500 companies get 14 percent of their revenue from Europe. Not surprisingly, some CEOs have been sounding more dour lately.

Many have slashed their guidance on earnings for next year. On Friday, chemical giant DuPont and semiconductor maker Lattice Semiconductor Corp. cut their financial outlooks for the current quarter. That followed a warning from Texas Instruments Inc. a day earlier that its revenue might fall short of expectations.

“We’ve seen the market highs for the year,” says Peter Boockvar, equity strategist Miller Tabak & Co. “Europe will be in recession and corporate earnings here could be challenging.”

Russell, the US Bank strategist, agrees that Europe is in trouble but he’s still cheery about U.S. stocks. He thinks earnings at S&P companies might grow only 7 percent in 2012, half the rate this year. But he’s still urging investors to buy.

Even at that lower rate, stocks are trading at roughly 12 times their projected earnings versus a long-term average of nearly 17 times, he says.

Translation: They’re cheap.

“We think investors will like what they see,” says Russell, assuming they “refocus on fundamentals.”

Given Europe’s troubles, it’s a big assumption.

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The Internal Revenue Service is under pressure to better police more than $100 billion of refundable tax credits it issues annually after a government watchdog questioned billions of dollars in payments.

Congress passed in October legislation authorizing a five-fold increase, to $500, in the penalty for paid tax preparers who don’t verify the eligibility of applicants for the earned income credit, by far the largest refundable tax credit.

Tax filers collected refunds of at least $55.1 billion in 2009 from the earned income tax credit, and the IRS estimated that more than $11 billion of that total was issued improperly, sometimes by mistake and sometimes as a result of fraud.

“The IRS is really stepping up enforcement,” Cindy Hockenberry, research supervisor for the National Association of Tax Professionals, said. The initial focus has been on the earned-income credit, but “they’re going to be branching out into other areas,” she said.

The association, based in Appleton, Wis., represents more than 21,000 tax preparers, accountants, attorneys and enrolled agents who work independently or for companies such as H & R Block Inc.

The IRS plans to give earned-income tax credit claims extra scrutiny during the 2012 tax filing season.

Oversight of refundable credits has become a political issue, with Republicans in particular demanding that the IRS do more to weed out ineligible recipients.

“We must balance the mandate to get refunds to those eligible as quickly as possible with ensuring that the money goes only to individuals who are eligible to receive it,” IRS deputy commissioner for services and enforcement, Steve Miller, told a House Ways and Means subcommittee hearing in May.

The earned income tax credit, passed by Congress in 1975 to offset the burden of Social Security taxes for the poor, has been expanded several times with bipartisan support, as an incentive to work.

However, Treasury Inspector General for Tax Administration J. Russell George criticized the IRS’s administration of the EITC and faulted the agency for potential improper payments involving two other refundable credit programs, one for higher education and the other for families with children payday loans.

George’s reports indicate that more than $18 billion of $101 billion for the three programs may have been improperly awarded.

Unlike a regular tax credit that offsets some or all of a tax liability, a refundable credit can include a cash payment in excess of the tax owed. As a result, refundable credits offer an incentive to defraud the government, George told the House Ways and Means subcommittee in May.

Legislation is pending to narrow eligibility for a refundable child tax credit. In a report in September, George’s investigators found that in 2009 about $4.2 billion, or 15 percent of $28.3 billion in additional child tax credits, had gone to people not authorized to work in the U.S.

The IRS declined George’s recommendation to seek more documentation of eligibility. In a statement at the time, the IRS said that the law authorizing the tax credit didn’t explicitly limit recipients to holders of a specific type of identification such as a Social Security number.

The IRS also took issue with George’s findings on the American Opportunity education tax credit, which helps low- and middle-income people pay for college. The credit, part of the 2009 stimulus law, was extended through December 2012 by legislation that also extended the tax cuts enacted under President George W. Bush.

In a report last month, George said 2.1 million taxpayers in 2009 received $3.2 billion in American Opportunity and other education credits that may have been wrongly awarded. That’s about 17 percent of the $18.7 billion of such credits distributed by the IRS.

The IRS disputed the findings, with spokesman Terry Lemons saying they were based on “a flawed and superficial analysis.”

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Online broker E-Trade Financial Corp. shares plunged nearly 5 percent in after-market trading following its announcement that it had concluded a strategic review and has no plans for a sale.

Shares fell 34 cents to close at $9.48. After it made the announcement, shares fell 46 cents, or 4.9 percent.

The company said it has concluded the review begun in August that was designed to consider all alternatives including a possible sale. The board unanimously determined that the continued execution of the company’s business plan is currently the best alternative, it said.

That also was the recommendation of Goldman Sachs & Co., hired as an adviser for the review.

E-Trade’s largest shareholder and bondholder, Citadel Advisors LLC, pushed the company earlier this year to seek a buyer.

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China will phase out power-draining light bulbs in an efficiency move certain to impact the global market.

The world’s biggest polluter will ban imports and sales of 100-watt-and-higher incandescent bulbs from Oct. 1, 2012. Lower-watt bulbs will be banned in phases until 2016.

China’s main planning agency says 3.85 billion incandescent light bulbs were produced here last year and 1 billion were sold domestically bad credit pay day loans.

The agency’s statement Friday said 12 percent of China’s total electricity use is for lighting. The move is meant to save energy and curb climate change.

The United States and the 27-nation European Union are phasing out the bulbs beginning next year as well.

Forecasters say Tropical Storm Rina has formed in the Caribbean Sea off the coasts of Honduras and Nicaragua and it could become a hurricane by the end of the week.

The U.S. National Hurricane Center said Sunday night that the storm’s center was located about 115 miles (185 kilometers) northeast of Cabo Gracias on the border of Honduras and Nicaragua.

It had maximum sustained winds of 40 miles per hour (64 kph) and was moving north-northwest at 8 mph (13 kph) quick payday loans.

A tropical storm watch was in effect on the coast of Honduras from Punta Castilla eastward to the Nicaraguan border.

Forecasters expect Rina to gain strength in the next 48 hours and said it could become a hurricane by the end of the week.

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NATO said its commanders were not aware that Libyan dictator Moammar Gadhafi was in a convoy that NATO bombed as it fled Sirte, as NATO’s governing body gathered Friday to decide how to end its bombing campaign in Libya.

The success of NATO’s seven-month military operation in Libya has helped reinvigorate the Cold War alliance and polished the reputation of France and Britain, the two countries that drove it forward. Analysts attributed its success to the fact that NATO remained steadfast over the summer during a long and grinding stalemate against Gadhafi loyalists and avoided the temptation to send ground troops into Libya.

In a statement Friday, the alliance said an initial Thursday morning strike was aimed at a convoy of approximately 75 armed vehicles leaving Sirte, the Libyan city defended by Gadhafi loyalists. One vehicle was destroyed, which resulted in the convoy’s dispersal.

Another jet then engaged approximately 20 vehicles that were driving at great speed toward the south, destroying or damaging about 10 of them.

“We later learned from open sources and allied intelligence that Gadhafi was in the convoy and that the strike likely contributed to his capture,” the statement said.

After Libya’s former rebels killed Gadhafi on Thursday, officials said they expected the aerial operation to end very soon. But the North Atlantic Council may also decide to keep air patrols flying for several more days until the security situation on the ground stabilizes.

The final decision will depend on the recommendation of Adm. Jim Stavridis, the supreme allied commander, and the Military Committee, the highest military organ.

NATO’s Secretary-General Anders Fogh Rasmussen says the end of the campaign “has now moved much closer.” He has also hailed the success of the mission, saying that it demonstrated that the alliance continues to play an “indispensable” role in confronting current and future security challenges business card.

NATO warplanes have flown about 26,000 sorties, including over 9,600 strike missions. They destroyed Libya’s air defenses and over 1,000 tanks, vehicles and guns, as well as Gadhafi’s command and control networks.

The daily airstrikes finally broke the stalemate that developed after Gadhafi’s initial attempts failed to crush the rebellion that broke out in February. In August, the rebels began advancing on Tripoli, with the NATO warplanes providing close air support and destroying any attempts by the defenders to block them.

French President Nicolas Sarkozy said Friday that “the operation has reached its end.” But how to draw down the campaign will be decided “with our allies and also with input from the (interim government).”

But in London, Britain suggested that NATO may not immediately complete its mission in Libya, wary over the potential reprisal attacks by remaining Gadhafi loyalists.

“NATO will now meet to decide when the mission is complete, and once we are satisfied that there is no further threat to the Libyan civilians and the Libyans are content, NATO will then arrange to wind up the operation,” British Defense Secretary Philip Hammond told BBC radio.

Sarkozy, British Prime Minister David Cameron and President Barack Obama discussed the NATO campaign in a video conference late Thursday.

“They discussed the need to maintain the NATO-led operation while a threat remained to civilian life,” a spokeswoman for Cameron’s office said, on customary condition of anonymity.

___

Associated Press writers Elaine Ganley in Paris and David Stringer in London contributed to this report.

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Virginia and Florida are suing the Bank of New York Mellon over the institution’s handling of both states’ pension funds.

The Virginia lawsuit filed Thursday seeks $120 million in damages. It also seeks $811.6 million in civil penalties.

Florida also is seeking damages and civil penalties.

The Bank of New York Mellon holds about $54 billion in funds for the Virginia Retirement System. Florida’s system is worth some $120 billion.

Both lawsuits accuse the bank of overcharging those pension funds on foreign currency transactions.

The bank said in a statement that the lawsuits are unwarranted, and that the defendants will fight the claims in court.

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A near month-long inspection of Greek finances by the European Union, European Central Bank and International Monetary Fund concluded “positively” on Friday, the country’s Finance Ministry said.

The inspection is crucial to whether Greece will receive the next batch of loans from a euro110 billion bailout fund from the EU and IMF agreed last year and could well inform discussions over an extension to the current financial rescue package.

The prevailing view in the markets is that Greece, which is effectively locked out of raising money through the sale of its bonds because of prohibitively high interest rates, will need another bailout.

The negotiations with the debt inspectors, known collectively as the troika, dealt with both the steps Greece has been taking to reform its economy in line with last year’s package of loans, and a program of additional measures for the years 2012-2015.

A privatization program that seeks to raise funds for the cash-strapped country, further measures to be taken this year to meet deficit reduction targets and structural reforms to the Greek economy were all discussed, the ministry said in a statement.

The Greek government is seeking to narrow its deficit to 7.5 percent of gross domestic product by the end of this year, from the 10.5 percent it stood at in 2010. To achieve that, Finance Minister George Papaconstantinou last month announced remedial austerity measures worth about euro6.4 billion for this year.

The texts detailing the measures are to be finalized “in the coming days” and will be submitted to Parliament after being approved by the Cabinet, the ministry said.

The euro pushed up to day highs of $1.4585 after the statement, while anticipating the news, Greece’s borrowing costs eased during the day, with yields on 10-year Greek bonds dropping some 60 basis points to 16.2 percent. Shares on the Athens Stock Market closed up 4.4 percent at 1,333.66.

The troika was expected to issue its own announcement later Friday.

The ministry statement came as Prime Minister George Papandreou held emergency talks in Luxembourg with Jean-Claude Juncker, who heads the group of 17 eurozone finance ministers business card.

The original bailout plan, from which Greece began drawing funds in May last year, envisaged the country being able to tap bond investors in 2012, but with the interest rates on Greek bonds remaining exceptionally high, that appears increasingly unlikely.

Those funding gaps are likely to have to be filled by a second bailout being negotiated by other eurozone countries.

The austerity measures taken so far have led to frequent strikes and demonstrations.

The latest saw about 200 protesters from the communist party-backed PAME union take over the Finance Ministry building at dawn Friday They unfurled a giant banner from the roof calling for a general strike.

Other protests and demonstrations were planned for later Friday evening.

The new cutbacks are expected to be submitted to parliament in coming days, where the governing Socialists have a six-seat majority. But several Socialist backbenchers have voiced strong criticism, and the government this week canceled two planned briefings of its deputies to avoid a showdown.

Sixteen Socialist lawmakers have signed a letter calling for an extensive debate on the proposed new cutbacks before their ratification, with one of the signatories threatening on Friday not to vote for the reforms.

“If the draft legislation is brought to Parliament without prior discussion, I will not vote for it,” Thomas Robopoulos told state NET television.

Greece’s woes have been compounded by repeated downgrades of its credit ratings _ Moody’s warned Wednesday that the country had a 50-50 chance of defaulting on its debts.

On Friday, Moody’s also cut the ratings of eight Greek banks _ National Bank of Greece, Eurobank, Alpha, Piraeus, Agricultural Bank of Greece, Attica, Emporiki and General Bank of Greece.

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Derek Gatopoulos and Nicholas Paphitis in Athens contributed.

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