How long can the rally go? Wall Street's blue chip and broad-market indexes have posted eight straight weeks of gains, capping an 11-month rally. Yet few investors are ready to cash out.
The Dow Jones industrial average of 30 blue-chips advanced 1.26 percent in the week to Friday to 10,600.51, a 30-month high.
The Standard and Poor's 500 broad-market index climbed 1.59 percent to 1,139.83.
The tech-heavy NASDAQ composite, up for six consecutive weeks, gained 2.57 percent to 2,140.46, hitting its highest level since July 3, 2001.
The market has shrugged off concerns about a faltering economic recovery after last week's tepid job creation report.
"The paltry payroll report for December brought the Wall Street perma-bears out of hibernation, with talk of a possible double-dip [recession] in the economy," said Ethan Harris at Lehman Brothers. "But, other data confirmed that the recovery remains solidly on track."
Investors have been closely watching earnings reports for signs of the health of profits and the economic picture, and have been encouraged by the likes of General Electric and IBM, with some disappointments from Intel and Yahoo.
The markets were also driven by other factors, getting a lift from merger talks after the US$58 billion JP Morgan Chase deal with Bank One, which fueled speculation on other tie-ups that could push prices up.
However, some analysts say much of the positive news has already been priced into stocks, and that the rally must pause.
"The market seems a little top-heavy," said Todd Leone, head of listed trading at SG Cowen.
"I think we're overextended and I'd like to see a little bit of a pullback before we move higher," he said.
Alfred Goldman at AG Edwards said a pause from the frenetic pace of the market of recent months would be positive.
"As we look into 2004, we believe that the economy and corporate earnings will slow down from the rapid pace seen in last year's third and fourth quarters. he said.
"In our opinion, this will be a positive development for investors. We believe the tortoise will again beat the hare in the long run. The most critical aspect of economic growth is its durability, not its intensity," he said.
But Steven Young, chief investment strategist at Banc of America Capital Management, said investors have been holding a lot of cash that could go back into the market this year to fuel further gains.
"If optimism for the year continues to build, investors certainly have the capacity to add further to their stock holdings," he said.
"Even with interest rates at 45-year lows, more than two trillion dollars remains in low-yielding money market accounts. While not all of these assets will find their way to the stock market, recent investor tendencies toward reducing cash holdings and increasing allocations to stocks may persist for several more months, thus offering further support for the market rally," he said.
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