US stocks may smash through to record high

THE WEEK AHEAD

US stocks could break through to all-time closing highs this week – provided a resolution to the fiscal woes of Cyprus satisfies investors.

Assuming Cyprus’ troubles are solved, investors will turn their attention to economic data due during the holiday-shortened week, with equity markets closed on Friday for the Good Friday holiday.

The data will include orders for durable goods and pending home sales for February as well as the final reading of fourth-quarter gross domestic product.

But with the trend of economic data showing a slow improvement in the US economy, few negative surprises are expected this week. That could enable the S&P 500 to once again make a run at its all-time closing high of 1,565.15. After all, for all of the worry about Cyprus, the S&P only dipped 0.2 per cent last week and the benchmark index remains up more than nine per cent for the year.

“The story doesn't seem to be weakening and domestically it seems to be growing in terms of strength,” said Sandy Lincoln, chief market strategist at BMO Asset Management US.

“People are looking at a better backdrop, whether it is the jobs data, the GDP data or the consumer stepping up on the retail sales side in spite of fiscal drag.”

Stocks could see another boost in the form of quarter-end “window dressing” in which money managers add outperforming stocks to their portfolios. With earnings season several weeks away, only nine S&P 500 companies are expected to report quarterly results this week, including discount retailer Dollar General and video game retailer GameStop.

A strong showing this week could push the index past both its record closing high as well as its record intraday high of 1,576.09.