US markets took a needed pause Friday after a relentless 10-day run, marked by the Dow setting new records for eight straight sessions.
While expectations of a correction were common, most analysts continued to dismiss suggestions of a new bubble and said stocks could continue to climb as long as the Federal Reserve keeps in place its easy money policy.
Even new Treasury Secretary Jacob Lew, asked on the news channel CNBC if the markets were again overinflated, dismissed the idea. "The analysis that I've seen doesn't give me reason to be worried right now," he said.
Economic data continued to favor a stronger growth picture.
Official figures in the past week showed that consumption appeared to be holding up amid higher gasoline prices and higher tax deductions on paychecks, and in the face of spending cutbacks by the government.
That helped keep a footing under market sentiment, taking the Dow to its newest closing record Thursday, at 14,539.14, some 375 points beyond where the old 2007 high-mark stood before the market surge of the past two weeks.
The S&P 500 came within less than two points of its October 9, 2007 record on Thursday, but could not manage a new benchmark.
Overall for the week, the Dow Jones Industrial Average added 0.81 percent, ending at 14,514.11.
The broader S&P 500 gained 0.62 percent to 1,560.70, while the Nasdaq Composite crept up 0.14 percent to 3,249.07.
The Dow's record aside, the S&P's steady gains say more about the market's rebound, according to Peter Cardillo of Rockwell Global Capital.
"It indicates the broader market is now beginning to blossom out. It's not being confined to a list of 30 blue-chip stocks. So that means you have a greater participation of stocks moving in an upward direction."
Whether there is much more buying sentiment to keep powering the markets ahead is a matter of debate, however.
"The relentless march of the equity markets has raised concerns as to whether monetary policy is fueling another bubble. The rise, so far, appears to be in line with improving economic fundamentals, which may still be underestimated," said analysts at Wells Fargo Securities.
Cardillo dismissed the bubble description. "But we're probably reaching levels where the market needs to take a rest... So we could be in for a slight pullback until the latter part of April/May."
But Peter Cecchini of Cantor Fitzgerald was less confident.
"It's a very mixed picture. There are plenty of arguments on the fundamental side, globally, that lead me to believe that the US market is way overdone given the fundamentals of the rest of the world," he told AFP.
The slow speed of the rise has been a good sign, not outpacing too much the data on the economy and corporate profits, some analysts say. But they also note that it represents a caution that could easily turn to selling.
"The volumes are low, overall we haven't seen huge activity,' pointed out Steven Rosen at Societe Generale.
"I don't get the feeling that the market as a whole believe in this rally," he said.
The divergence of views has left traders eyeing every piece of economic data and, especially, every comment from members of the Federal Reserve, whose ultra-low interest rates and continued easy money policies underpin the boom.
That gives increasing importance too to the Federal Reserve's policy board meeting next Tuesday and Wednesday.
The last meeting showed increasing signs of nervousness among a handful of members of the Federal Open Market Committee over the risks in its stimulus efforts, particularly its open-ended, $85 billion a month bond purchases feeding liquidity into the economy.
Fed Chairman Ben Bernanke has steadfastly defended the current central bank policies over the past three months, arguing that the US economy remains fragile and unemployment too high to curtail monetary easing.
But any sign of more support in the FOMC for reeling in that program could push up interest rates and the dollar and take some wind out of stocks.