Halfway through a rocky year, Wall Street's hopes for a summer rally have gained fresh momentum after weathering what some analysts say is the worst of the year for the stock market.
In the week to Friday, the major indexes posted small gains, rebounding from a drubbing the prior week.
The Dow Jones Industrial Average eked out a gain of 0.05 percent to 10,303.44 while the Standard and Poor's 500 broad-market index drifted up 0.24 percent for the week to 1,194.44.
The tech-heavy NASDAQ index rose 0.20 percent to 2,057.37.
The market was able to hold modest gains despite a disappointment that the Federal Reserve gave no signal it was ready to pause in its rate-hiking cycle.
Just past the halfway point for this year, the major indexes are in negative territory, but the broad-market Standard and Poor's index is within striking distance of its starting point for the year of 1,211.92.
Some analysts say the market has held up well in the face of surging oil prices, rising interest rates and concerns about an economic soft patch.
Patrick O'Hare at Briefing.com said he sees the Standard and Poor's index getting "a mid-single digit percentage gain this year," which would mean the market will break out of its torpor of the first six months of this year.
A major catalyst, he said, would be a signal for the Federal Reserve that it is at or near the end of of its rate-boosting cycle after nine quarter-point increases.
Some analysts see a repeat of last year's pattern, when markets were stuck in a range for most of the year before breaking higher in the final two months.
However, O'Hare said that history might not repeat itself.
"Mindful of the dubious track record of conventional wisdom in the first half of 2005, we're inclined to think the eventual bull run will occur sooner rather than later in the second half of 2005," he said.
Tobias Levkovich at Smith Barney maintains year-end targets of 1,300 for the Standard and Poor's and 11,700 for the Dow.
"In our opinion the market seems poised to advance further off its April 20 lows," he said.
"While plenty of investors have their backs turned towards equities, we reiterate our view that the equity market is in the midst of a trading rally, which we anticipate will continue into the third quarter and may surpass our target of 1,300 for the Standard and Poor's 500 during that run," Levkovich said.
Others say fears about an economic soft patch are receding, pointing to the revision showing a 3.8 percent expansion in the first quarter, improving consumer confidence and stronger-than-expected data on the manufacturing sector.
Ethan Harris at Lehman Brothers said the strong housing sector may also sustain economic momentum.
"With no sign of abatement in home price inflation, we now expect strong housing wealth effects to continue to drive growth through the end of the year, essentially cancelling out the negative impact of higher oil prices," he said.
Bonds fell as investors shifted their views on the economy and interest rates. The yield on the 10-year US Treasury bond rose to 4.049 percent from 3.914 percent a week earlier while that on the 30-year bond climbed to 4.298 percent from 4.215 percent. Bond yields and prices move in opposite directions.