Stocks could continue their quiet march into record territory with few catalysts to force a change in direction before the Federal Reserve meets next week.
The Tuesday closed at 1,950 for a second day, just fractionally lower than Monday's close, and the first down day in five sessions. The Dow rose 2 points to a new record of 16,945.
The move higher in stocks has defied many Wall Street strategists, some of whom have already raised their targets.
Bob Doll, chief equity strategist at Nuveen Asset Management, said his target of 1,950 was reached sooner than he expected, and he expects to see 2,000 before next year.
"The prediction is the market has another good year, and if we close right here we'll have had a good year. Obviously as the economy gets better and earnings get better, I do think the market does better. I wouldn't be surprised to see a two handle before the end of the year," he said.
Doll does expect the sleepy trading of recent sessions to give way to more volatility. Trading volume has been light with the NYSE composite volume under 3 billion shares Monday and Tuesday.
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"I think that volatility is often related to liquidity," he said, noting the Fed's easing has aided the stock market's gains. "If the real economy takes more liquidity, giving us a few more jobs, a little more GDP and a little more inflation, that means there's less liquidity to leach into financial markets."
As for the Fed meeting next week, he expects it to stay the course and continue to taper its bond buying program. "I think the Fed's been pretty explicit about what it's doing. I don't think that's where the volatility comes from," he said.
Ward McCarthy, chief financial economist at Jefferies, said he expects the Fed to cut its growth forecast next week to a range of possibly 2.6 to 2.8 percent or lower for 2014, from 2.8 to 3 percent. He also expects the Fed to cut its 2014 target range for unemployment to 6.3 percent, from 6.1 percent, since unemployment is already at 6.3 percent.
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"It will be an interesting meeting and an interesting policy statement," he said.
Traders already expect some volatility around that meeting, and the Fed's comments on the economy will be closely watched. One of the catalysts keeping stocks moving higher is the belief the economy is improving and growth is picking up so any big negative surprise in economic data could also create volatility.
"I'm thinking the second half of the year will probably be more volatile than the first half," Doll said "The data I think will look better. I think the leading economic indicators have been looking a bit better. I think the jobs numbers have been looking a bit better. We're not going to look back at 2014 and say 'remember how good the economy was.' I just think it's notably better than the first half of the year."
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Doll said the main risk to the market is that the economy does not grow enough. As a result earnings would not improve enough to support market valuations. He said an inflation scare is another risk for the market, but he doesn't see inflation at problem levels though it could pick up slightly.
Other strategists also see the market continuing to climb.
"It's hard to get a bull market top when there's so little participation by the retail investor," Jason Trennert of Strategas said on "Closing Bell." "We think there's more room to go."
What to Watch
The Treasury auctions $24 billion in reopened 10-year notes at 1 p.m. Wednesday. Ian Lyngen, senior Treasury strategist at CRT Capital said the market may have already built in a concession but he's watching trading ahead of the auction.
The 10-year was yielding 2.64 percent at the end of day Tuesday, edging up throughout the day.
Target shareholders meet at 2:30 p.m. ET
Mortgage applications are reported at 7 a.m. ET
OPEC meets at 4 a.m. and is not expected to take any action. U.S. oil inventory data is released at 10:30 a.m. ET
Treasury Secretary Jack Lew speaks at the Economics Club of New York at 8 a.m.
Earnings are expected from H&R Block, Restoration Hardware, Lands' End, Lululemon Athletica and Finisar.
—By CNBC's Patti Domm