Wall Street eases into the home stretch

NEW YORK (CNNMoney.com) -- Stocks are likely to trade in a narrow range during the home stretch of the year as investors lock in profits and leave their desks for the holidays.

The major indexes have already risen more than 4% this month and are poised for double-digit gains for the year. On Friday, stocks ended a quiet session hovering at two-year highs as President Obama signed an $858 billion tax-cut plan into law.

Investors had been biting their nails over the past month as Republicans and Democrats debated the proposal to extend Bush-era tax cuts. With a final stamp of approval slapped on the controversial tax-cut bill Friday, another layer of uncertainty was lifted from the stock market.

"We've now seen QE2 get introduced, Republicans take the House and the tax package get done," said Tyler Vernon, CIO of Biltmore Capital. "All this good news has come into the market very quickly and we've seen a tremendous run in stocks, so now we're going to spend the next couple weeks digesting it."

With little market-moving economic news on tap and light trading volume expected in advance of the holiday this week, investors are already looking ahead to 2011 -- and many boast bullish outlooks for the new year.

Several banks -- including Goldman Sachs -- already boosted their 2011 economic growth forecasts and S&P 500 targets in anticipation of the tax-cut extension. And more banks are likely to raise their estimates now that the plan is a done deal.

"A lot of people were lying in the weeds waiting to see what the House and Senate did with the bill," said Phil Orlando, chief equity market strategist at Federated Investors. "Now that [the bill] is signed, everyone across Wall Street is going to be sharply increasing their outlooks."

On this holiday-shortened week, no economic reports are scheduled for Monday, Tuesday or Friday. Here's what's on tap the rest of the week.

Wednesday: The existing home sales index from the National Association of Realtors is due in the morning. The index is expected to have risen to a seasonally adjusted annual rate of 4.68 million units in November, up from a 4.43 million unit rate in October, according to a consensus of economists surveyed by Briefing.com.

The Commerce Department releases its third estimate for third-quarter gross domestic product (GDP) growth. GDP is forecast to have grown at a 2.6% annualized rate, up from the previously reported 2.5%.

The U.S. government's weekly crude oil inventories report and a reading on mortgage applications also are on the schedule.

The FHFA Housing price index for October is due in the morning, but is not typically a market mover.

Thursday: The Commerce Department is slated to report the latest data on personal income and spending before the opening bell.

Economists expect the report to show income rose by 0.2% in November, following a rise of 0.5% the previous month. Personal spending is forecast to have risen 0.4% during the month, the same as a month earlier. The Core PCE - the spending report's closely-watched inflation component - is expected to have risen 0.1% after coming in unchanged the previous month.

Meanwhile, the Department of Labor will release its weekly jobless claims report. Claims are expected to have remained relatively unchanged at 424,000, compared to 420,000 the previous week. Continuing claims, a measure of Americans who have been receiving benefits for a week or more, are expected to have fallen to 4,075,000 from 4,135,000 the previous week.

The Commerce Department's report on November durable goods orders is expected to show a decline of 0.8%, following a drop of 3.3% in October.

The University of Michigan's final reading on consumer sentiment in December is due after the start of trading. It's expected to tick down to 73.7 from 74.2 in the previous month.

Meanwhile, the new home sales index for November from the Census Bureau is due at 10 a.m. ET. The index is expected to have risen to a seasonally adjusted annual rate of 305,000 units, from a 283,000 unit rate the previous month.