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Market Preview: Big, Round Numbers

 

Updated from 8:12 p.m. ET to include after-hours action.

NEW YORK ( TheStreet) -- One after another, the big, round numbers continue to fall.

First, it was the Dow Jones Industrial Average busting through 13,000. The blue-chip index began the week at 12,922, and finished Thursday at 13,252.76. Bank of America (BAC) continues to lead the way, rising a stunning 59% year-to-date, including a nearly 16% surge this week to reclaim $9.

Then it was the Nasdaq Composite's turn. Being at levels unseen in more than a decade apparently wasn't good enough as the index, up an amazing 17.3% so far in 2012, now appears to have the tailwind of a potential M&A boom at its back. The Nasdaq blew past 3000 on Tuesday and hasn't looked back, closing Thursday at 3056.37.

And finally, today saw the S&P 500 cross the finish line of 1400. Its close at 1402.60 was the highest since early June 2008 before the financial crisis took hold. For added perspective, consider that Bank of America didn't close on its purchase of Countrywide Financial until three weeks later.

The index, widely considered the broadest measure of the health of the U.S. stock market, is now up 11.5% for the year, and looking fairly bulletproof. The all-time closing high of 1565 is less than 12% away though, so investors may want to prep for some profit-taking.

UBS, which has a year-end target of 1475 for the S&P 500, said Wednesday it thinks the liquidity-driven bounce in stocks is in the "late innings" and the firm is now looking for earnings to pick up the slack. It thinks corporations have likely wrung all they can out of margins and now expects topline growth to take over. In the fourth quarter, UBS said 6.5% of the earnings growth seen was from revenue, while just 2.2% came from margins.

"In many ways, the current recovery in corporate profits is quite typical," the firm said. "At the beginning of an earnings recovery, bottom-line growth is most often driven by margin expansion. As the economy improves, margins rebound, operating leverage wanes, and revenue becomes the primary catalyst driving earnings. As a result, EPS growth rates tend to moderate as the cycle naturally matures."

Of course, the biggest driver of corporate earnings of late has been Apple (AAPL), which breached its own big, round number on Thursday, making a brief foray above $600. The sprint from $500 to $600 took roughly a month from a close at $497.67 on Feb. 15, so it's not exactly a shocker that the shares couldn't hold the line on Thursday.

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