US stocks face holiday-shortened week on a roll

Wall Street capped a seventh straight week of gains at 2007-2008 highs, "fed by announcements of good earnings and positive talk from companies," said Gregori Volokhine at Meeschaert Capital Markets.

Over the week the Dow Jones Industrial Average rose 0.96 percent to close Friday at 11,787.38 points, its highest finish since June 25, 2008.

The tech-rich Nasdaq rose 1.93 per cent to 2,755.30 points, its best since November 6, 2007.

And the Standard & Poor's 500 index, a broad measure of the market, added 1.71 per cent at 1,293.24,50 points, a level last seen on August 28, 2008.

"US equity markets performed well over the week, as solid fourth-quarter earnings reports tempered a dose of sobriety on the economy," IHS Global Insight analysts said in a client note.

Alcoa, which unofficially kicked off earnings season Monday, was joined in posting forecast-busting results later in the week by computer chip maker Intel and banking giant JPMorgan Chase.

The US markets will be closed Monday in observance of the holiday for slain civil rights leader Martin Luther King.

But investors will see earnings season pick up steam next week as big companies roll out financial results, beginning Tuesday with Citigroup, IBM and Apple.

On Wednesday Goldman Sachs weighs in, followed by Google Thursday and Bank of America and General Electric Friday.

Marc Pado at Cantor Fitzgerald predicted an intense four days for investors, with a "slew of big names crunched in the week."

If individual earnings are good, the sectors should also do well, he said.

"We have the opportunity to add a little more to the rally but after that it's going to be difficult to move the market much higher, at least for the short term," he added.

The US markets were resilient this week in the face of renewed worries about the eurozone sovereign debt crisis.

Successful bond issues by Portugal, Spain and Italy helped reassure investors that the prospect of default was receding.

A series of economic releases highlighted an improved but spotty economic recovery from recession.

On Thursday, news that the US trade deficit with the rest of the world narrowed unexpectedly in November had some analysts raising their forecasts for fourth-quarter gross domestic product growth.

But the politically sensitive US trade shortfall with China grew to two-thirds of the trade deficit of $38.3 billion.

Trade and currency issues were expected to figure prominently in Chinese President Hu Jintao's state visit to Washington next week.

Friday's keenly awaited December retail sales report, including the crucial Christmas holiday shopping season, came in a bit below expectations with a gain of 0.6 per cent from November.

Industrial production jumped 0.8 per cent in December, double the average estimate, while consumer prices climbed 0.5 per cent, led by surging gasoline prices.

"Momentum appears to be carrying over into the first quarter. Data out this week will test this view, as monthly business surveys arrive for January along with December's leading indicators," Moody's Analytics analysts said.

"Reports are likely to show housing starts scraping along the bottom but home turnover picking up. Finally, there will be keen interest in whether initial jobless claims reverse course after rising more than 50,000 over the past two weeks."