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Like a turtle crossing the highway, stocks continued to make slow but steady progress this week, dodging the oncoming traffic of a brewing debt-ceiling debate and a lingering European debt crisis.
The S&P 500 inched up another percentage point this week, closing at 1,486 – its highest level in more than five years. The benchmark U.S. index has now risen 5.8% since the fiscal cliff was settled on the last day of 2012.
However, most of those gains came on the last day of December and the first day of January. Some analysts figured stocks would pull back a bit after the big post-fiscal cliff push. But as history tells us, the real pullback probably won’t come until the late-February debt-ceiling deadline draws near.
If last month’s fiscal cliff and the debt-ceiling fiasco of July 2011 are any guide, investor panic won’t truly set until the last 10 days before the deadline. So for the next month, don’t expect any major pullbacks even with stocks at five-year highs.
In fact, if the next few weeks of earnings reports turns out to be as strong as this week, the S&P may blow right past the 1,500 range.