Bulls keep their cool
Despite rising oil prices and bond yields, some slower earnings, stocks have held on. Can that continue this week?
By Alexandra Twin, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) - A profit warning from an influential company? A jump in oil prices? Higher worldwide interest rates? We can handle it, stock investors seems to be saying lately.

That was certainly the case last week, when Intel's revenue warning, a rebound in oil and gas prices and a surge in Treasury bond yields stalled, but failed to really dent the stock market.

So far this year, the bull has handled challenges with aplomb.
So far this year, the bull has handled challenges with aplomb.
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And that broad optimism is bound to continue supporting stocks in the week ahead, analysts say. Longer term, there are more questions, but for next week, things are looking decent.

"Oil prices are staying up there, bond yields are rising, there are these tough headwinds out there, but the market is holding up," said Donald Selkin, director of research at Joseph Stevens.

He attributes this strength to a mix of investor optimism and seasonal factors. "It may be that the market is expecting that GDP for the first quarter will recover, which will help corporate profits."

Fourth quarter GDP (gross domestic product growth) was a disappointing 1.6 percent, but a spate of strong economic reads have suggested that the first quarter GDP will be much better.

In addition, early to mid-march is often a supportive time of year for the stock market, according to the Stock Trader's Almanac.

All about the economy

With the majority of the fourth-quarter earnings having already been reported, next week's focus will be on oil prices, interest rates and the economic news.

Highlights include the January trade balance and the February employment report. (For a preview of next week's key economic events, see the chart.)

Those and other expected reports next week should generally "continue to point to expansion after the weakness in the fourth quarter," said Peter Cardillo, chief market analysts at S.W. Bach & Co. The reports should continue to support sentiment.

But looking out a little more, things could get trickier. With so much good news being anticipated by investors, the concern is that the good news loses the ability to boost stocks.

"The market has gotten so optimistic and that's going to make it harder for it to stay that way," said Paul Rabbit, president of Rabbit Capital Management. "There's already so much good news priced in."

He said that this was evident in that investors seem to be looking past many of the so-called negatives, and are stocking their portfolios with high beta, riskier kinds of stocks.

However, Selkin says he doesn't see this as worrisome just yet. Technology and financial stocks are starting to strengthen, large, medium and small cap stocks are all participating and the Dow industrials and S&P 500 remain near multi-year highs.

All of these are factors that suggest some continue support, at least in the very short term. Top of page

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