The U.S. equity market suffered another loss on Thursday, as buying efforts were clipped by the eurozone's problems and the inability to hold technical support levels.

Over the past two sessions, the S&P 500 has declined 3.3% and it is down 3.8% for the week.  It will take some kind of rally today, then, for the market to close the week with a gain. 

Maybe if Tim Tebow, the new king of late comebacks, was ringing the opening bell, it could happen, but given what he did to the Jets last night, he probably has as much chance of getting on the floor of the NYSE right now as Occupy Wall Street does.

Be that as it may, there is a bit of comeback effort in the making at the moment.  The S&P futures are up 10 points and are trading 0.9% above fair value on this options expiration day.

The move in the futures market has coincided with an improvement in European averages, many of which have recouped earlier losses as sovereign bond yields have backed down from yesterday's disconcertingly high levels.

Accordingly, we have seen a narrowing of credit spreads, particularly in the case of Spain and France, although it should be noted that the narrowing has been a function of yields on Spanish and French debt coming in and, strikingly, the yield on the German bund also going up.

In the case of Germany, recent weakness could simply be an unwinding of some safe-haven trades, but with ECB head Mario Draghi imploring eurozone governments today to get on the ball and get the EFSF going, Spanish elections this weekend, and mass protests in Greece, it seems unlikely that holders of eurozone debt will stray too far from Germany.

It is believed of course that the ECB is the main force behind the improvement in eurozone bond markets.  That is about the only reasonable explanation considering nothing has changed in Spain overnight, and yet the yield on its 10-year note has dropped more than 40 basis points to 6.36%.

On a related note, there is a report in a German paper today that the ECB has a "secret" bond buying limit of 20 bln euros per week.  According to Reuters, the ECB declined to comment on the report, yet the aforementioned comments from Mr. Draghi underscore the ECB's reluctance to be the lender of first, second, and last resort in these markets.

There isn't a lot of corporate news of note -- not that that would matter much in the current environment where all eyes and ears appear to be pinned on the latest happenings in the eurozone.

That could change early next week, or even by the end of today, as key deadlines loom for the Super Committee to reach a compromise on a deficit reduction plan. 

We have heard a number of pundits suggest their failure to do so would be a major negative for the U.S. equity market.  That could be, yet we struggle with that idea considering the prevailing view, based on the debt ceiling debacle, is that the Super Committee won't meet its objective.

In other words, can it really be a negative shock when a negative outcome is already expected?

We shall soon see, but the drama soon to unfold in Washington, combined with the drama unfolding in the eurozone, are certainly factors that have kept investors on the sideline of late watching, and hoping, for a Tim Tebow moment.

--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.