Wall Street looked to be wrapping up a solid year after five weekly gains for blue chips and investor sentiment riding high.
The Dow Jones Industrial Average of 30 blue-chip companies gained 0.45 percent in the holiday-shortened week to Friday to end at 10,324.67, for its fifth consecutive weekly gain.
The broad-market Standard & Poor's 500 index also gained for the fifth straight week, up 0.66 percent to 1,095.89.
The tech-heavy NASDAQ composite, up in four of the past five weeks, meanwhile gained 1.13 percent for the week to 1,973.14.
Barring any major changes in the final three sessions of 2003, the Dow and S&P indexes appeared set to post gains of some 25 percent, in a solid rebound after three negative years. The NASDAQ meanwhile was showing a gain of more than 45 percent.
Last week's economic data appeared to be the icing on the cake for Wall Street as it wrapped up the year.
The government confirmed that GDP expanded at an annualized 8.2 percent pace in the third quarter, the briskest since 1984. Separate data showed consumer spending surged at a 17-year record pace of 6.9 percent in the quarter, even faster than first thought.
"We continue to have an economy where demand is strong, income is rising but inflation is tame," said Joel Naroff at Naroff Economic Advisors. "That bodes well, at least in the short run, for the bond markets and the equity markets."
Also in the past week, UBS said its investor optimism index rose to a 21-month high. UBS investment strategist Tracy Eichler said stocks are mostly shaking off worries about terrorism because "people anticipated it ahead of the holidays."
She said the investor optimism index rise indicated that "investors -- more so than ever -- think this is a good time to be invested in the market."
Alfred Goldman at AG Edwards said Wall Street is still showing positive momentum even after a strong, 10-month run, shrugging off most negative news including the discovery of a presumed case of mad cow disease.
"Market action continues to exhibit a positive bent as it managed to sidestep a potentially negative emotional catalyst in the form of mad cow news," he said.
"The equity market remains in an upward trend from its October 2002 lows and the current trading rally has been in place since March 11, just six days before President Bush imposed a 48 hour deadline on Saddam Hussein," said Tobias Levkovich at Smith Barney.
"Since that time, investors have weathered bond market euphoria, weak employment numbers and mutual fund trading scandals."
But Levkovich is urging clients to beware of a retrenchment next year amid higher interest rates and a cooling of economic and earnings growth. He is calling for the Dow to fall to 9,750 and the S&P index to 1,025 by the end of next year.
"We expect that current equity market strength should continue through the first quarter of 2004," he said. "Yet, we remain convinced that the market is operating within a trading environment rather than a new secular bull market and we think that stocks likely will retrench as 2004 progresses given the probability for higher bond yields."
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