WALL Street is stuck in a highly volatile range as investors hoping for a rally into the end of the year are browbeaten by Europe’s unfolding crisis.

For months, investors have been enthusing about valuations, earnings and, more recently, signs of an improving economy. Those may be good reasons why stocks should rally, but even the most ardent are starting to sound a bit glum.

The political intrigue in southern Europe has flummoxed investors Stateside. Papademos has replaced Papandreou. Berlusconi is, well, Berlusconi. The headlines and the subsequent volatility seem relentless.

“It literally just changes consistently each and every night,” said Jeremy Zirin, chief US equity strategist at UBS Wealth Management in New York.

“Earlier last week, there were worries about a potential Italian default and now we’ve seen government and regime change in two of the periphery nations.”

Events in Europe over the weekend could end up shaping the start of the trading week in US markets.

Italy’s Senate approved a new budget law, clearing the way for approval of the package in the lower house on Saturday and the formation of an emergency government to replace that of Prime Minister Silvio Berlusconi.

In Athens, former European Central Bank policy-maker Lucas Papademos was sworn in as Greek prime minister, replacing predecessor George Papandreou after days of political wrangling. He is tasked with meeting the terms of a bailout plan.

“For the markets to continue to rally, we would need to see market confidence that Italian, Spanish and French bonds are money good,” Zirin said.