Maybe the federal government should
shut down more often.

Stocks soared 2%-3% after the warring
parties in Washington, D.C., hammered out an 11th-hour deal Wednesday,
temporarily funding the budget and raising the Treasury’s debt ceiling, which
allowed the government to reopen its doors. Never mind that markets will likely
face a similar threat again around early February, since the deal is simply a
provisional patch-up.

For
a little while, anyway, investors won’t have to worry much about D.C., and
that’s something to be thankful for. Markets will get back to parsing
third-quarter earnings reports, which will move to the forefront for the next
few weeks, until the retail selling season begins on Thanksgiving.

Positive quarterly profit-report
surprises released late in the week from well-known names like Google (ticker: GOOG), Morgan Stanley (MS), and General Electric (GE) helped push
the market forward. They were more than enough to make up for
weaker-than-expected results from Goldman
Sachs Group (GS), and IBM (IBM).
The latter two, down 1% and 7%, respectively, restrained the Dow Jones
Industrial Average, as their relatively high-priced stocks make them among the
most influential in the index.

Nevertheless, the Dow rose 163 points
on the week, or 1%, to 15,399.65. The S&P 500 index, meanwhile, jumped 41
to 1744.50, setting a new all-time closing high in the process, which the Dow
was unable to do. The Nasdaq Composite index soared over 3%, or 122 points, to
3914.28, and is up a whopping 30% on the year. That’s its highest close since
Sept. 8, 2000.

In the context of the Federal
Reserve’s continuing easy-money policy and low interest rates, restrained
inflation, and decent earnings growth, the path of least resistance is up, says
Michael Purves, chief global strategist at Weeden. “The market looks a lot
like 2012 now, with strong Fed support and slow grinding growth,” he adds.

Indeed, the Fed is “highly
unlikely” to initiate any tapering—that is, reining in its monthly
bond-buying fiscal stimulus—at its end-of-October meeting, says Peter
Jankovskis, co-CIO at Oakbrook Investments.

While the market rose Thursday after
the debt-ceiling deal, Friday’s rise came on good old-fashioned earnings
surprises, he says. Getting the focus away from Washington and back on
corporate earnings is a positive, he adds.

Even so, the bull is beginning to show
its age, he adds. While earnings growth is decent, “companies are
struggling with revenue growth,” which ultimately is expressed in future
profits, Jankovskis says.

If the market does surge higher,
Purves says, investors will have to grapple with a bull whose characteristics
are becoming riskier. Continued inflows of money into equities will push the
market higher, but this is a bull where the price-to-earnings (P/E) ratio is
higher and the earnings growth rate lower than many of its predecessors (Source:  Barrons Online).