After a Scorching February, Investors Are Upbeat

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Has Wall Street taken to lithium draughts, or what?

In February, the

S&P 500

advanced 69 points, or 7.1%, to finish at 1049. The

Dow Jones Industrial Average

climbed 639.22 -- 8.1% -- to 8545, while the tech-resplendent

Nasdaq Composite

hopped 151.16, or 9.3%, to 1770. It's a pretty heady pace, and one the market clearly can't keep up forever. But for the week beginning March 2, it looks like the bullish tone will persist.

"I don't see any reason for a market hiccup in the short term," says Eric Miller, chief investment officer at

Donaldson Lufkin & Jenrette

. "I doubt it's going to be a big change week -- we're still in a window before earnings warning season."

Given the lack of any earnings-related news, stocks will probably continue to take their cues from what has become a feature of the market -- companies' surprisingly healthy appetite for one another in recent weeks.

"I guess the week's going to depend on merger announcements," Miller says. "They remain an important but relatively unknown market influence on a short-term basis. All we know is there are going to be more of them."

While the recent M&A activity has been significant, Jim Herrick, managing director of trading at Milwaukee-based

Robert W. Baird

, warns that it isn't a reason to go into the weekend any more fully invested than otherwise. "Going forward, you have to take your shots at what sectors you might see consolidation in, but you're rolling the dice when you do that."

But basically, Herrick thinks the market's in pretty good shape.

"I just think this market action is better across the board," he says. "We're seeing leadership changing. One day it might be the financials, the next it might be the drugs. It's a good sign."

Treasury traders will be setting up all week for Friday morning, when the February

jobs report

is released.

It may be one of the more interesting economic reports to come along in a while. In his recent

Humphrey-Hawkins

testimony,

Alan Greenspan

indicated that the

Federal Reserve

is more or less on hold until the truth of the Asian economic crisis' effect on the U.S. is better known. That spurred a little selling in the Treasury market, as investors adjusted their positions to reflect more symmetrical risks in the interest-rate environment.

If the jobs number is lower than expected, investors may take that to mean that a whiff of Asia is finally getting into the economic data. That would send more buyers into the bond market, as investors took bets on a Fed easing.

Conversely, if the jobs number is much stronger than expected (as it has been for the last three months), it could be bad for Treasuries.

"I think it most certainly is a danger if you were to get a stronger-than-consensus number," says Lee Youngdahl, economist at

Aubrey G. Lanston

. "You could get the yield

on the 30-year Treasury to between 6 1/8% and 6 1/4%. Obviously people are getting impatient for this Asian crisis to unfold."

In a recent

article,

TheStreet.com

pointed out that some on Wall Street worry that stocks could hit a rough patch if the yield on the long bond goes above 6%.

In a light week for earnings,

Kmart's

(KM:NYSE) fourth-quarter earnings on Wednesday will be the headliner.

First Call

consensus estimates are for the company to earn 46 cents per share. Besides the bottom line, investors will be watching to see if the retailer's flagging apparel division is showing any signs of life.