US stocks could take off this week as investors get their first read on the holiday shopping season. And Friday's November jobs report may signal whether the Federal Reserve will end its rate hikes soon, analysts said.
After five straight weeks of gains, the three major US stock indexes are set to extend the rally into December.
"Consumers may or may not have cut back on retail spending, given the high cost of energy," said Tim Ghriskey, chief investment officer of Solaris Asset Management.
US oil futures prices have slid from a late August peak. But they're still high enough that winter heating and driving costs are a concern to consumers - and retailers.
Investors will cope with a blizzard of US economic data in the coming week.
Home sales, consumer confidence, retail sales, GDP, the Federal Reserve's Beige Book, personal income and spending, the Institute for Supply Management's manufacturing index and November jobs are on the calendar.
Any inflation signs in Friday's November employment data may cast doubt on whether the Fed will stop raising interest rates during the first quarter of 2006.
This time of year, consumer confidence and retail sales will merit special attention.
"We'll get reports starting on Monday about how today went and they're often considered indicative of the season," Mr Ghriskey said on Friday, as shoppers poured into the stores. The Friday after Thanksgiving, called "Black Friday", is considered the start of the holiday shopping season in the US when stores lure customers with extreme bargains.
For the week, the Dow Jones industrial average rose 1.5 per cent, while both the Standard & Poor's 500 Index and the Nasdaq Composite Index gained 1.6 per cent.
Both the S&P 500 and the Nasdaq closed at fresh four-and-a-half-year highs on Friday, while the Dow ended at its highest since March.
For November, the Dow is up 4.7 per cent, while the S&P 500 is up 5.1 per cent and the Nasdaq is up 6.7 per cent.
For the year to date, the Dow is up 1.4 per cent, the S&P 500 is up 4.7 per cent, and the Nasdaq is up four per cent.
The Conference Board's November consumer confidence number, set for release tomorrow, may be the most eagerly awaited indicator of this holiday season.
"This is basically going to be telling us what kind of momentum we have going into the holiday season," said Anthony Chan, managing director of JP Morgan Asset Management.
Recent declines in gasoline prices and other positive economic indicators led the National Retail Federation to raise its retail sales forecast last week to a gain of six per cent over last year, up from an earlier forecast for a five per cent increase.
With retailers competing to give consumers deep discounts on holiday gift items, analysts are wondering whether strong sales will be enough to make them profitable.
"To drive the five (per cent) to six per cent sales growth that people are estimating, it's going to come at the expense of margins and the question is: To what extent?" said Peter Boockvar, equity strategist at Miller, Tabak & Co.
Looking at the luxury spending sector, jewellery retailer Tiffany & Co. Inc. is due to report third-quarter earnings this week.
Stocks often go up in December in the time-honoured year-end rally. But any sign of inflation could keep the Fed raising rates and derail the market's gains, analysts said.