Stocks 'move at a snail's pace' into the new year

NEW YORK (CNNMoney.com) -- Stocks are expected to continue to inch higher in the final week of 2010, as investors return from a long holiday weekend and prepare to close out their books for the year.

With a light economic calendar next week, reports on consumer confidence and jobless claims will be the main focus.

"We're going to move at a snail's pace next week, with everyone still on vacation," said Tony Zabiegala, managing partner at Strategic Wealth Partners. "We're probably just going to see stocks continue to melt upward until the end of the year."

Markets have had a strong showing in December. The blue-chip Dow is up 5%, the S&P has risen 6% and the Nasdaq has climbed 7%. All three major indexes are up more than 10% for the year.

Gradually improving economic data, combined with the Federal Reserve's efforts to stimulate the economy, have given stocks a lift in recent months. As long as the data doesn't improve so much that the Fed deems more stimulus unnecessary, stocks are likely to continue their upward trend.

"We want enough growth so that we don't fall into a double-dip recession or have an Armageddon, but we want slow enough growth that the government will continue to throw money on the market," said Keith Springer, president of Springer Financial Advisors. "And that's exactly what we've got right now."

While low volume will likely keep stocks in a narrow range next week, investors are betting on a strong 2011.

The latest sentiment reading from the American Association of Individual Investors' showed that 63% of investors are bullish going into the new year, while only 16% are bearish.

That puts the number of bulls close to a record high, while the spread between bulls and bears is the widest since 2007, said Ron Courser, president of Ron Courser & Associates.

"The Fed stimulus has been like crack to the market," said Courser. "But this is a really dangerous market right now, because what happens if QE2 doesn't work and they take it away? We could be in for a big correction if people come out and say it hasn't succeeded and the whole thing caves in."

With no market-moving economic reports scheduled Monday, here's what to expect for the rest of the week:

Tuesday: The Case-Shiller 20-City index of home prices in major metropolitan areas for October is due shortly after the market opens. Economists expect a 0.2% decline after the previous month's 0.59% gain.

At 10 a.m. ET, the Conference Board will release a reading on consumer confidence for December. The index is expected to have risen to 56.1 from 54.1 in November.

Wednesday: The U.S. government's weekly crude oil inventories report is due in the morning, along with a report on mortgage applications.

Thursday: The Department of Labor releases its weekly report on jobless claims before the bell. The number of Americans filing new claims for unemployment insurance is expected to have edged down to 416,000 last week from 420,000 in the previous week.

Continuing claims, a measure of Americans who have been receiving benefits for a week or more, are forecast to have eased to 4,030,000 from 4,064,000.

After the start of trading, the government is expected to report that pending home sales slipped 1.8% in November after jumping 10.4% in October.

The Chicago PMI, a regional reading on manufacturing activity, is also due after the bell. Economists forecast the index to remain unchanged at 62.5 in November.

Friday: No market-moving economic data is on tap.