High liquidity keeps driving US stocks up

WASHINGTON — US stocks sustained their push upward on Friday, capping the week with the Dow hitting its best level since Dec. 10, 2007, as high liquidity and ultra-low interest rates fuel an appetite for risk.

Investors remained hesitant during the week though as still-slow economic growth underpins a cautious outlook for corporate earnings, the third quarter reporting season beginning on Tuesday.

For the week the Dow Jones Industrial Average added 1.29 percent to end at 13,610.15, rising three straight sessions to Friday.

The broad-based S&P 500 ended up 1.41 percent in the week, finishing at 1,460.93, still 14 points below its high for the year.

The tech-heavy Nasdaq only put on 0.64 percent in the week, to 3,136.19, a 2.1 percent fall in its largest company, Apple, pulling it lower Friday.

The markets appeared ready to end the week on a strong bullish note early Friday after the Labor Department announced the jobless rate had fallen sharply to 7.8 percent in September, the lowest level since January 2009 and a good sign for President Barack Obama as he fights for re-election.

“While the media may be concentrating on the fact that payroll levels deteriorated in September, the underlying trends in the data were extremely positive,” said Briefing.com.

But with a long weekend ahead — though markets will be open on the Columbus Day holiday Monday — investors sold off stocks in the afternoon for a fairly flat final day of the period.

“We erased the bulk of the day’s rise at the end of the session because there was no longer anyone in the market, as often happens these days on Friday afternoon,” said Gregori Volokhine of Meeschaert France.

Brokers said there was still a lot of cash available for investing, and that investors would continue to support the market, especially given the Federal Reserve’s commitment to its new QE3 stimulus program.

“As the market continues to make new highs and confidence slowly comes back, there are still enormous amounts of cash on the sidelines, which could continue to push this bull market much higher for a very long time,” said Ryan Detrick of Schaeffer’s Investment Research.

The coming week will supply fresh data on the US international trade balance in August (Thursday), producer prices in September (Friday) and consumer sentiment (Friday).

The data is expected to provide little direction on the economy, however, except for a strong rise in gasoline prices behind the producer price figure.

Most attention will be on earnings, which will include Alcoa on Tuesday and JP Morgan Chase on Friday.