For
a few days at least, the stock market resembled its 2013 self, setting high
after high last week. Share prices rose smartly, over 1%, and the Standard
& Poor’s 500 index saw record closes in three of last week’s four trading
days, while the Dow Jones Industrial Average also had its all-time best close
Friday.

The
surge came amid thin volumes in a holiday-shortened week. Despite poor
first-quarter GDP numbers — which investors blamed on frigid weather — most of
the economic data, such as falling jobless claims, were positive.

Also
boosting stocks and spirits was a lack of geopolitical tension; an M&A
battle in the food industry; a recovery in small-cap stocks; and expectations
that the European Central Bank will do some monetary easing next week, says
Michael Matousek, head trader at U.S. Global Investors. Even the $2 billion
offer for the Los Angeles Clippers by former Microsoft chief Steve Ballmer
probably got animal spirits moving, he adds.

On
Thursday, first-quarter gross domestic product was revised down to an
annualized negative 1%, or contraction, from a positive 0.1%, weaker than
expected, though much of the revision came from lower inventories. Investors
mostly ignored GDP data, says Tom Carter, a trader with JonesTrading
Institutional Services. With little to dampen the mood, investors found it
tough to sit on the sidelines watching stocks rise day after day, and the
“pain trade was up,” he adds.

Jobless
claims for the week ending May 24 fell 27,000 to 300,000, below the consensus.
That, adds Mark Luschini, chief market strategist at Janney Montgomery Scott,
measures a more recent past than GDP and points to improving labor and housing
markets. It’s more indicative about the second-half, which should see rising
economic activity and a good climate for profit growth, says the bullish
strategist, who notes that outside the stock market, investors still face a
lack of better-yielding alternatives.

Last
week, the Dow rose 111 points, 0.7% to 16,717.17. The S&P 500 closed at
1923.57, up 23 points. The Nasdaq Composite index advanced 1.4%, or 57, to
4242.62.

This
week promises new data with “more gravity,” says Carter, and perhaps
a truer indication of market sentiment. Investors will most likely focus on two
figures from the Institute for Supply Management that could give a more
up-to-date picture of the economy than GDP did: the ISM May manufacturing
purchasing managers index on Monday, and the nonmanufacturing PMI on Wednesday (Barrons Online).