However, the rally proved to be short-lived, indicating that the bumpy ride for financial markets isn't over yet. European stocks fell after a positive start. Indian markets were down sharply too, though a lot of it had to do with the RBI policy.
"This crisis is not over," said John Silvia, chief economist at Wells Fargo. "The crisis will wax and wane for years. Maybe it will wane for the time being."
Here are the reasons why the Greece verdict failed to enthuse markets.
1) Despite a pro-bailout verdict, Greeks remain deeply opposed to the harsh budget cuts demanded by their European neighbors in exchange for bailout money. Greek unemployment is almost 22 percent. Syriza, the anti-bailout party, signaled on Sunday that it wants no part of a coalition government. And while New Democracy and Pasok, another pro-bailout party, have enough seats to form one, it could disintegrate quickly.
"Basically, all this does is keep the patient on life support, but doesn't resolve the basic problem," Neil MacKinnon, global macro strategist at the investment bank VTB Capital, said.
2) No long-term solution to the debt crisis: There are too many problems in Europe, particularly in Spain, plus evidence that the global economy is cooling, to justify a celebration.
3) Spain is too big to rescue: Borrowing costs increased to dangerously high levels of 6.94 per cent in Spain. That is dangerously close to the 7 per cent rate considered by market watchers to be unsustainable over the long term and the point at which Greece, Ireland and Portugal sought a bailout. Spain's IBEX index traded with over 1 per cent cut.
4) Hopes of Fed stimulus recede: With Greece voting to stay in the euro, fears of governments defaulting on their debts, a run on European banks and a worldwide credit crunch reminiscent of the financial crisis in the fall of 2008, have been averted.
5) Europe is not the only concern: Even if Europe finds an answer, investors have to contend with other big problems in the world economy. Job growth in the United States is slowing, and China's white-hot economic growth is cooling.
(With inputs from AP)