The latest Federal Reserve take on the US economy and inflation reports this week may go a long way to determining whether investors will finally push Wall Street through key resistance levels.
Confirmation of a recovery in the US jobs market on Friday helped equities finish the week on a strong note, underpinning optimism that there's more good news ahead.
The Standard & Poor's 500 Index has risen for five weeks in six. It strengthened 0.1 per cent in the past five sessions, even amid concern about a downgrade in China's official 2012 growth forecast, a contraction in Europe's economy in the fourth-quarter and lingering worries about the Greek debt crisis as private bondholders waited until the last minute to signal participation in a bond swap.
Friday's US jobs numbers bolstered confidence that the world's largest economy remains on track for a sustained recovery. The 227,000 gain in payrolls followed a revised 284,000 climb in January that was bigger than first estimated; December's initial estimate also was increased. The jobless rate held at a three-year-low of 8.3 per cent.
The numbers helped lift the S&P 500 by 0.4 per cent on Friday, while the Dow Jones Industrial Average rose 0.1 per cent and the Nasdaq Composite Index advanced 0.6 per cent.
Investors will keenly eye a statement from the Federal Open Market Committee, following its meeting on Tuesday.
"The labour market continues to recover, and we're close to a self-sustaining expansion where you have job gains driving income gains, driving consumer spending, driving further job gains," Gus Faucher, a senior economist at PNC Financial Services Group Inc. in Pittsburgh, told Bloomberg News.
"Job growth has been stronger than the Fed was expecting, but I don't think this changes their decision-making. They've made it clear that they consider the unemployment rate too high," according to Faucher.
Technically, the market is hovering near key resistance levels, Chris Burba, a short-term market technician at Standard & Poor's in New York, told Reuters.
If the S&P 500, which closed at 1,370.87 on Friday, pushes above 1,376, that could suggest further gains ahead, while holding at or below that level could indicate selling, according to Burba.
While there could be a bump in the road, it won't derail the trend on Wall Street.
"There's so much cash in institutional portfolios, in individuals' portfolios," Natalie Trunow, chief investment officer of equities at Calvert Investment Management in Bethesda, Maryland, told Reuters. So much money "left equity asset classes and then went elsewhere for safety... I think the long-term move is on the upside."
Key US economic data to watch this week include retail sales and barometers of inflation, including the consumer price index.
Retail sales climbed 1 per cent in February, according to economists polled by Reuters, compared with an increase of 0.4 per cent in January. The report is due on Tuesday.
On Friday, the Consumer Price Index is forecast to show a rise of 0.4 per cent for February, according to a Reuters poll, accelerating from 0.2 per cent in January.
The solid economic data helped oil maintain its climb last week. Oil for April delivery rose 0.7 per cent last week and has gained almost 9 per cent this year.
It might pull back in the coming days, however.
Half of the 28 analysts surveyed by Bloomberg News forecast oil will fall through March 16. Ten respondents predicted prices will rise and four estimated there will be little change.
In Europe, the Stoxx 600 Index weakened 0.7 per cent in the past five days.
In the coming days, the German ZEW survey will provide clues on the strength of the euro zone's largest economy.
The second Greek bailout should get final approval at a euro-zone finance minister meeting in Brussels this week. The International Monetary Fund is expected to indicate its participation on March 15.
Also watched will be policy meetings of central banks in Japan and Switzerland.