NEW YORK (Reuters) ? U.S. stocks rose on Friday, setting major indexes up for a third week of gains, and money managers saw little on the horizon to tame the bullish trend.
The Dow and the S&P 500 are at more than 30-month highs, despite sluggish volume and myriad signs that a pullback is due. The Nasdaq Composite is at its highest in more than three years.
The S&P 500 is up 28 percent since the start of September, and this week doubled its level from the March 2009 lows, the quickest 100 percent jump since the Great Depression.
Investors have been braced for a pullback, with technicals pointing to signs of overbought conditions, but the market has for weeks defied those expectations.
More investors want in on the gains and are looking for any signs of price weakness to jump in, analysts said. The market started nearly flat on Friday.
"It certainly suggests a lot of buyers missed the rally over last two years ...(and) that the market has a lot of underlying support," said Charles Lieberman, chief investment officer of Advisers Capital Management in Hasbrouck Heights, New Jersey.
Paul Mendelsohn, chief investment strategist at Windham Financial Services, said, "Everything indicates we should be near a top, yet we just keep climbing higher."
Strong fourth-quarter earnings and data showing improvement in the U.S. economy have also helped propel stocks higher.
Caterpillar Inc (CAT.N) helped boost the Dow on Friday, rising 2 percent to $105.38 after the equipment maker said machinery sales through dealers accelerated in the three months through January.
The Dow Jones industrial average (.DJI) was up 45.64 points, or 0.37 percent, at 12,363.78. The Standard & Poor's 500 Index (.SPX) was up 2.49 points, or 0.19 percent, at 1,342.92. The Nasdaq Composite Index (.IXIC) was up 6.82 points, or 0.24 percent, at 2,838.40.
Volume has been light in the most recent leg of the rally, with just 6.7 billion shares changing hands on Thursday on the New York Stock Exchange, NYSE Amex and Nasdaq combined -- the second lowest total so far this year.
Volume was 4 billion shares by late morning on Friday, in line with the recent below-average readings.
Trading was also lackluster ahead of the long holiday weekend ahead. The markets will be closed for the U.S. Presidents Day holiday on Monday.
Overall, investors are coming to the realization that staying in bonds or cash is going to cost them, Lieberman said. "In both cases, they're being hurt," he said.
Among earnings reports, Brocade Communications Systems Inc (BRCD.O) topped estimates and forecast second-quarter profit above Wall Street's expectations, pushing its shares up 9.1 percent to $6.56.
Overseas, China raised banks' required reserves by 50 basis points on Friday, showing no let-up in the government's campaign to stamp out stubbornly high inflation.
(Additional reporting by Edward Krudy; Editing by Padraic Cassidy)
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