Investors have reason to be cautious.
The U.S. economy is stable, but growth is anemic. The European debt crisis is far from resolved. Some investors are concerned that the market's gains this year are being fueled by the Federal Reserve's easy money policy, and will disappear once the Fed reverses course.
The crisis-of-the-moment is Cyprus, the Mediterranean island country that struggled this week to get an emergency bailout from other countries. For many investors, the bailout deal was a reminder of Europe's lingering economic problems.
On Thursday, U.S. economic news was mixed.
The U.S. economy grew faster than first estimated in the fourth quarter, the government reported. But the growth, an annual rate of 0.4 percent, was still weak. The number of Americans seeking unemployment aid jumped for the second straight week. Longer-term, though, jobless claims have been declining since November. Unemployment is 7.7 percent, versus the 4.7 percent in 2007.
"If you're a bull or a bear, you could find enough news out there to convince you of your position," said Jim Lauder, CEO of Global Index Advisors in Marietta, Ga., and co-portfolio manager on Wells Fargo Advantage Dow Jones Target Date Funds.
Cyprus reopened its banks after closing them for nearly two weeks to keep depositors from making panicked withdrawals. Portugal reported that its budget deficit was widening.
Brian Singer, partner at William Blair in Chicago, said the market's gains Thursday were more about a lack of any major negative developments than the appearance of any good ones. Investors aren't necessarily convinced of the economy's health, but they've learned to live with the sicknesses.
"We are looking at a realization that Western civilization is not ending as we know it," Singer said. "Fiscal discussions in the U.S. have settled into an acceptable stalemate. The Italian elections that did not result in a government are on hold. Cyprus hasn't sunk into the Mediterranean."