NEW YORK (AFP) – Wall Street stocks are set to build on nearly year-and-a-half highs as they face next week's key economic reports and the US Federal Reserve's monetary policy meeting.
Traders work in the newly renovated section of the New York Stock Exchange. AFP files
"We are in the process of testing our highs from mid-January on the S&P 500," said Gina Martin of Wells Fargo Securities.
"The fears for sovereign credit risk and a possible step further in China relative to tighter (banking) reserve requirements have dissipated for now," she said.
"We are back to focusing on much better economic growth numbers."
The Dow Jones Industrial Average rose a modest 0.55 percent over the week to close at 10,624.69.
The technology-rich Nasdaq composite gained 1.77 percent to 2,367.66.
And the broad-market Standard & Poor's 500 index advanced 0.99 percent to 1,149.99.
While the blue-chip Dow remained below its January peaks, the other two major indices surged.
The Nasdaq on Thursday hit its highest level since late August 2008 and the S&P 500 reached an October 2008 high.
The week was marked by indecision in the absence of major economic indicators to provide direction.
"I look at the way the market has performed in the absence of real catalyst, it's constructive," Craig Peckham of the Jefferies brokerage said at the end of a week light on market moving economic data.
Peckham said the quiet week could have been a "wonderful opportunity" to take profits, and the fact that the market gained "should be taken as a pretty good positive."
The main spark of interest came from merger and acquisition activities, which had been scarce during the financial crisis because of tight credit conditions.
Among the merger news was life insurance giant MetLife's deal Monday to buy a unit of American International Group in a 15.5-billion-dollar transaction that will help AIG pay back part of its government bailout.
On Friday, fertilizer producer Terra Industries sealed a 4.7-billion-dollar agreement to be acquired by CF Industries, after Norway's Yara International declined to raise its rival offer.
In another sign of reviving market dynamism, sensors specialist Sensata Technologies opened for trading on the New York Stock Exchange on Thursday in the largest initial public offering so far this year.
"The big question is what is on the horizon that can keep this market going?" said Marc Pado of Cantor Fitzgerald.
"At least right now we have a good answer: earnings," he said.
"Inventories continue to decline, productivity continues to increase, production increases, that sets us up for a lot of positive surprises for earnings."
Investors will be focused on the meeting of the Federal Reserve's policy makers on Tuesday.
"The market always tend to get a little nervous before the Fed meetings because the language is so important," Pado said.
The Federal Open Market Committee is widely expected to hold interest rates near zero, where they have been since December 2008, in a bid to pull the economy out of the severe recession that had begun a year earlier.
Investors will pore over the panel's statement after the meeting for hints about the direction of monetary policy and fresh signs of plans to wind down the extraordinary support measures.
The bond market was mixed over the week. The yield on the 10-year US Treasury bond rose to 3.710 percent from 3.682 the previous week and that on the 30-year bond dipped to 4.633 percent from 4.639 percent. Bond prices and yields move in opposite directions.
Several key economic reports are on tap next week.
Monday brings February industrial production data and the Empire Manufacturing survey of activity in the New York state region.
The ailing housing sector gets new reads on Tuesday with building permits and housing starts numbers.
Inflation data follows, with wholesale prices on Wednesday and consumer prices on Thursday.
And on Thursday, the weekly initial unemployment claims report gives an up-to-date snapshot of the embattled labor market, where unemployment is hovering at double digits.