Wall Street: Rally keeps rolling

NEW YORK (CNNMoney.com) -- Bad news, good news, mediocre news. It doesn't seem to matter much to stock investors these days, as the latest leg of the bull run soldiers on.

Economic growth is at the slowest pace in four years, you say? Home prices are expected to end the year lower for the first time ever? First-quarter earnings growth is at a 3-1/2 year low? Iran won't halt its nuclear program?

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• Dow keeps setting records
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All that is cause for concern. Apparently, just not for stock investors.

Since bottoming in late February, stocks have been on the rise as investors have welcomed surprisingly decent first-quarter earnings, the wave of merger and buyout news, and a bevy of corporate stock buyback plans.

Last week, the Dow Jones industrial average and the Russell 2000 small-cap index both hit record highs yet again, while the S&P 500 rose to within 18 points of its all-time high. The Nasdaq hit a new 6-year high.

The uptrend that has lifted stocks of late is unlikely to peter out in the week ahead, even as investors take in potentially alarming reports on housing and inflation. (See chart for details.)

Housing and inflation - because of whatever impact they might have on the economy and Federal Reserve policy - are "the two biggest areas of the economy that separate economists right now," said Michael Sheldon, chief market strategist at Spencer Clarke.

As such, the focus this week will be on the April housing starts and building permits reports, due Wednesday; and, the Consumer Price Index (CPI) and so-called core CPI, due Tuesday.

Other reports due in the week include manufacturing in the New York and Philadelphia regions, consumer sentiment and the index of leading economic indicators.

Upbeat reports would reassure investors. But even reports that suggest some economic weakness would probably be received well by the stock market, if the recent 'all news is good news' attitude prevails.

That was certainly the case Friday when stocks rose despite a weak April retail sales report.

Why? Because Friday's session also brought a mild inflation report, right after the Federal Reserve said its main worry is still inflation. So the stock market bet that weak retail sales, a.k.a. slower economic growth, means the Fed is more likely to cut rates by the end of the year than raise them.

A number of Federal Reserve officials are due to speak this week, including Chairman Ben Bernanke on Tuesday and Thursday.

In addition to economic news, a few companies report earnings during the week, including Hewlett-Packard (Charts, Fortune 500), Home Depot (Charts, Fortune 500) and Wal-Mart Stores (Charts, Fortune 500). (see chart for details)

There are "fundamental reasons" why the stock market would seem to be due for a big pullback right now, but it's just not happening, said Paul Levine, president at Lifetime Financial Services.

He said that's largely because any negatives are being tempered by the substantial amount of money pouring into the market.

"Between the incredible amount of M&A activity and corporate stock buybacks, there's just so much liquidity out there," Levine said. "And that's lifting stocks."

First-quarter earnings are currently on track to have risen over 8 percent from a year ago, according to the latest Thomson Financial estimates, versus forecasts for a rise of 3.3 percent just over a month ago.

Meanwhile merger and acquisition activity year-to-date is currently 65 percent ahead of where it was at this point in 2006, according to a recent Standard & Poor's report. That doesn't look to ease up anytime soon.

However, that isn't to say there won't be more selloffs in the next few weeks, particularly as the market moves into the typically choppy summer period, when bulls tend to be more preoccupied with the beach than making big changes to their portfolios.

Wall Street has already had its share of down days over the last few months, following the occasional big earnings disappointment or surprisingly hawkish comment from a Federal Reserve official.

But the declines have been short lived, with investors using the selloffs as a reason to get back into the market at lower levels.

That trend is likely to continue, at least in the short term. "I don't think we'll see a big pullback," said Steven Goldman, market analyst at Weeden & Co. "I think we'll continue to be supported with people buying on the dips."