Surging share prices on Wall Street over the past week have put the 13,000 level in sight for the Dow blue-chip index even though some analysts see momentum fading.
The latest rally has been fueled by stronger-than-expected profits for top US firms and hints that inflation is easing, but a slew of more corporate results in the coming week and a reading on US economic growth will put momentum to the test again, analysts say.
The Dow Jones Industrial Average of blue chips rode a seven-session winning streak to close Friday at an all-time high of 12,961.98, with a weekly gain of 2.77 percent.
The broad-market Standard & Poor's 500 index meanwhile rallied 2.17 percent to end the week at a six-and-a-half-year record of 1,484.35, edging closer to its all-time high of 1,527.46 in March 2000.
The tech-heavy NASDAQ composite advanced 1.38 percent for the week to 2,526.39.
The gains over the past week were inspired by "surprisingly stronger earnings than people had been expecting," said Owen Fitzpatrick, market analyst at Deutsche Bank.
A blowout billion-dollar quarterly profit from Google, and robust results from Bank of America, Coca-Cola and JPMorgan Chase helped offset disappointments from a few including Yahoo.
Significantly, the market reaction was positive to the latest consumer inflation data.
Although US consumer prices rose a strong 0.6 percent in March as energy costs shot higher, the "core" inflation level seen as an important forward-looking gauge showed a modest 0.1 percent rise.
If the trend holds, analysts said it could induce the Federal Reserve to cut interest rates later this year, which would stimulate economic and profit growth.
"Inflation risks are fading," said Stephen Gallagher, economist at Societe Generale in New York.
"It appears that the benign core CPI was sufficient to ease inflation concerns in the market," he said.
Brian Bethune and Nigel Gault at the research firm Global Insight said the past week's market action came "in response to good earnings reports, better news on the economy and quiescent core consumer price inflation."
They said in a note to clients that earnings "were boosted by solid export demand and currency gains from a weak US dollar" but that "this will be a tough act to follow next week" with data expected to "reinforce the picture of a wounded housing market and a winded economy."
The analysts said they expect US GDP for the first quarter to show an advance of 1.3 percent.
Meanwhile Bob Dickey, technical analyst at RBD Dain Rauscher, said momentum is showing signs of slipping after gains for the Dow in 13 of the past 14 sessions.
"The market is hitting new highs, but is doing so in an unconvincing fashion," he said.
"The relatively low volume is less than what would be desired at new highs," Dickey added.
Dickey said he sees the Dow moving as high as 13,200 before some consolidation begins, and then perhaps another leg up.
"It appears to be shaping up in a similar fashion as last year, in which the summer months saw a market correction that led us into one of the best rally periods since 2003," he said.
"We expect to see further gains over the near-term, but also believe that we will see the adage of `sell in May and go away' work again this year as it did in 2006," Diskey said.
Bonds were mixed over the past week. The yield on the 10-year Treasury bond edged up to 4.672 percent from 4.761 percent a week earlier while the 30-year bond yield eased to 4.845 percent from 4.926 percent. Bond yields and prices move in opposite directions.
Among earnings in focus in the coming week will be reports from ExxonMobil, Chevron, Microsoft and AT&T.
Economic data in addition to GDP will include reports on home sales and consumer confidence.
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