US indexes are close to highs after stock lifts

STOCKS have been on a tear in January, moving major indices within striking distance of all-time highs. The bearish case is a difficult one to make right now.

Earnings have exceeded expectations, the housing and labour markets have strengthened, lawmakers in Washington no longer seem to be the roadblock that they were for most of 2012, and money has returned to stock funds again.

The Standard & Poor’s 500 Index has gained 5.4 per cent this year and closed above 1,500 – climbing to the spot where Wall Street strategists expected it to be by mid-year. The Dow Jones industrial average is 2.2 per cent away from all-time highs reached in October 2007. The Dow ended Friday’s session at 13,895.98, its highest close since 31 October, 2007.

The S&P has risen for four straight weeks and eight consecutive sessions, the longest streak of days since 2004. On Friday, the benchmark S&P 500 ended at 1,502.96 – its first close above 1,500 in more than five years.

“Once we break above a resistance level at 1,510, we dramatically increase the probability that we break the highs of 2007,” said Walter Zimmermann, technical analyst at United-ICAP, in New Jersey.

This week will see a wide array of economic releases which will reveal whether the current confidence is well founded.Data out this week includes figures for durable goods orders and house sales, out today, followed by news on house prices and consumer confidence tomorrow.

On Wednesday there will be announcements on mortgage applications and purchasing prices and the Federal Reserve will give an interest rate decision and monetary policy statement. Figures for spending, unemployment, construction and vehicle sales will follow on Thursday and Friday.