May's rally is already running into June, and the momentum could keep going as markets next week focus on the promise of new mergers, Fed-speak, a modest batch of economic data and corporate conferences.
Creeping rates in the bond market, which on Friday hit their highest level since last summer, will also be on the minds of stock traders. This is one factor that could keep gains in check.
Stocks ended the week on an up note, with the Dow registering a gain of 160 points, or 1.2%. The Nasdaq rose 2.2%, while the S&P 500 notched its first record close in seven years and ended the week in record territory at 1536 -- a 1.4% gain. For the month of May, the Dow is up 4.3%, the S&P is up 3.3% and the Nasdaq is up 3.1%.
The bench-mark 10-year Treasury fell 23/32 this week, pushing its yield to 4.955%, its highest level since Aug. 14, 2006. Five percent is a level stock traders have told us could become a worrisome level for equities.
"I think rising rates are going to be an issue for a while," says CNBC's Rick Santelli, who watches the bond market from Chicago's futures pits. "I think there are three things to look at right now to see if rates move up: You look at rising rates worldwide. You look at the strengthening domestic economic data, and you look at inflation. Even if inflation data moderates, the other two are strong enough to keep pushing U.S. rates higher. I think the whole yield curve has a chance of being above 5% in the next couple of weeks."
Along with May's record-breaking moves has come a growing number of naysayers who increasingly chatter about the idea of a pullback for stocks this summer. So we talked to CNBC's Jim Cramer to get his take on the market -- and we know that even on stormy days for stocks, Cramer holds his ground.
"I'm seeing the kind of action that would define the infancy of this move," says Cramer. He sees no summer selloff, though he says there could be choppy days ahead. He talked about unabated merger activity as one big driver. "If I don't see a deal Monday morning, I get depressed," he said.
"We're just in a monster, amazing moment," he says. "I love this market so much, I have to check my enthusiasm." Some stocks seem to overcome any kind of resistance. "They're like greyhounds no longer on the track."
"The stocks that are moving up every day are at 12 times earnings, not 200. There is a value perimeter you should be worried about, but we're nowhere near it," says Cramer.
Fed Chairman Ben Bernanke will speak to the International Monetary Conference in South Africa on Tuesday morning. His topics are the economy and housing.
"Any time Bernanke talks about housing and the economy, it's well worth listening," says CNBC senior economics correspondent Steve Liesman.
Liesman himself is bringing us an important Fed moment this week. On Friday, Liesman interviews Chicago Fed President Michael Moskow on "Squawk Box." This marks Liesman's 13th exclusive on-camera interview with a Fed official. You may recall the market-moving interview Liesman had last month with Richmond Fed President Jeffrey Lacker, who said he didn't see inflation coming down. Lacker, by the way, speaks on the economy in Frederick, Md. Wednesday, and Kansas City Fed President Thomas Hoenig speaks in Cody, Wyo. on policy and the economy that same day.
Factory orders are reported Monday. Non-manufacturing ISM comes out Tuesday, and productivity and costs are released Wednesday. Thursday reports include initial jobless claims, wholesale trade for April, flow of funds and consumer credit for April. International trade data is due Friday.
"June is going to be all about momentum, and it's also going to be about the quarter end," says our Rick Santelli. "First-quarter GDP doesn't mean much, but the first look at second-quarter growth, to me, is going to make or break it for the latter part of the year."
"If we don't build momentum going back the other way, it's going to change the course here if we stay under 1% (GDP growth). That would change a lot of equities' outlooks. We need to get close to 2% in GDP here to sustain the market," he said, adding, "Stocks are giving us an optimistic look at the future."
The American Society of Clinical Oncology holds its much-watched annual meeting this week, and much of the data will be reported over the weekend. Our Mike Huckman, who covers the drug industry and pays close attention to developments in cancer, says this is the big event of the year.
While some of the already leaked reports have influenced stocks ahead of the meeting, Huckman says the conference could still be newsy and will show important trends in the industry.
Onyx is one stock people will be watching when it releases data early Monday on how its kidney cancer drug fared in the treatment of liver cancer. The street expects that news to be bullish, and Onyx CEO Hollings Renton will appear on "Squawk on the Street" with Huckman.
"An emerging theme is big pharma is back in oncology," Huckman says. "Genentech and ImClone were dominant ... It used to be biotech's conference." But Huckman says we'll now see big companies like Lily, Bristol-Myers Squibb, Glaxo, Pfizer and Novartis playing key roles. "All of those guys are going to have major data," says Huckman.
Playing ASCO has been a popular pastime in the stock and options markets for a couple of weeks now. "Don't be surprised if we see sell-offs Monday. A lot of the stocks already moved ahead of the meeting," he says.
Companies on Parade
This time of year is big for corporate conferences, and this week is no exception. Goldman Sachs' lodging, gaming and leisure conference takes place on Monday and Tuesday. The Internet Retailer conference unfolds in San Jose Monday to Thursday. Merrill Lynch's Agricultural Chemicals Conference is Tuesday. Bear Stearns holds a Boston Biotech Confab Thursday. Piper Jaffray's consumer conference will be held Wednesday and Thursday in New York, and the New York Society of Security Analysts has a Metals and Mining conference Wednesday. Merrill Lynch holds a conference on U.S. media Thursday in London.
Dow component Johnson and Johnson holds an analyst day in New Brunswick, N.J. on Thursday.
Consumer Shopping Meter
Nothing shows more clearly how the consumer is doing than monthly retail sales reports. Chain stores will report May sales results on Thursday.
"The first month of the second quarter is rebounding from a dismal April, but May was a mixed month for many retailers," says our retail reporter Margaret Brennan.
"While warmer weather boosted sales of seasonal apparel toward the end of the month, sales got off to a slow start due to rainy weather in many parts of the country -- that could put pressure on department stores to mark down in June to move old inventory," Brennan says. "Food sales have been strong, but the interesting numbers to watch will be the discounters. That's where we'll see whether and just how much the record high prices at the pump are affecting consumer habits."
Around The World
The G8 Summit takes place in Heiligendamm, Germany, from Wednesday to Friday. Our Trish Regan will be there. Hedge funds' role in the global markets and climate change are two stories we'll be watching from the summit.