This Thanksgiving, investors have more to be grateful for than they probably realize.

Despite four interest rate hikes by the

Federal Reserve

, ballooning deficits and a 62% jump in the price of oil over the past year, the stock market and economy have shown remarkable resilience. Corporate profits have posted double-digit increases, long-term interest rates have remained subdued, and inflation isn't a problem.

While the future might not be quite so rosy, and doomsday scenarios about the falling dollar abound, there are still plenty of reasons to give thanks on Thursday. So let's do just that.

Bull Still Running

Make no mistake, 2004 has been no 2003. After rising more than 25% last year, the

S&P 500

has tacked on just 6% year to date while the

Nasdaq

has added less than 5%.

But consider what the market has been up against this year, and the gains look a bit more impressive. Since late June, the Fed has raised rates by a full percentage point, and oil prices have remained stubbornly high, even hitting $55 a barrel last month before succumbing to a bout of profit-taking.

Tighter monetary policy and high energy prices act as a drag on growth and can pressure corporate earnings by squeezing margins. Yet companies have vigilantly managed costs under their control this year and repurchased vast quantities of stock, sending profits up 19% and the S&P 500 to its highest level in more than three years.

While some see the market as vulnerable right now, others say the outlook is bright, at least through year-end. As Merrill Lynch points out,

Microsoft's

(MSFT) - Get Report

$32 billion special dividend is a potentially large source of liquidity when it is paid out on Dec. 2.

This year, about 223 companies have increased their dividends, up from 208 last year. Meanwhile, stock buybacks have amounted to $227 billion, the highest level in 17 years.

Stable Bonds

It's hard to be grateful for modest gains in the stock market this year without acknowledging the role the bond market has played.

Although short-term interest rates have gone up over the past five months, long-term rates have actually declined, as inflation and inflation expectations have remained tame. The yield on the 10-year note is currently sitting at 4.19%, down from 4.58% when the Fed embarked on its tightening campaign.

Low Treasury yields make stocks look more appealing and enable consumers to keep spending at a healthy clip. Mortgage rates, which are tied to Treasuries, fell to 5.72% in the week ending Nov. 24, down from 5.83% a year ago, according to Freddie Mac. In October, new-home sales jumped to 1.226 million units, the third-highest level on record.

A Slumping Dollar

In recent weeks, the dollar has fallen to a record low against the euro and a multiyear low against the yen as concerns about the huge current account deficit have intensified.

A declining dollar can make traveling abroad more expensive and can raise the cost of imports, and that fuels inflation. Moreover, it can prompt overseas investors to take money out of U.S. stocks and bonds, because these assets are worth less to foreigners when converted back into their local currency. All of this can lead to higher interest rates.

So why are we grateful?

Well, if it doesn't prove to be destabilizing, a slide in the greenback actually has a number of positive ramifications. For one thing, it can help corporate earnings, as firms that sell products overseas benefit from more favorable currency translations and from greater demand.

And since a weak dollar tends to boost U.S. exports, economists believe the trade deficit will narrow over time, reducing global imbalances and tempering "protectionist risks still evident in the U.S. Congress," according to Stephen Roach, chief economist at Morgan Stanley.

"A sustained but managed weakening of the dollar is good news for the global economy and world financial markets," Roach said.

Eliot Spitzer

The New York attorney general made the list in 2003 for cracking down on mutual funds and investment banks, and he's back again this year for taking on the insurance industry. In October, Spitzer alleged that

Marsh & McLennan

(MMC) - Get Report

, one of the nation's largest insurance brokers, had led an industrywide kickback and price-fixing scheme.

Since then, Marsh CEO Jeffrey Greenberg and five directors have resigned. In addition, employees at

American International Group

(AIG) - Get Report

,

Ace Ltd.

(ACE)

and

Zurich American Insurance

have pleaded guilty to charges stemming from the bid-rigging plot.

"The investigation is proceeding carefully and methodically," Spitzer said last week. "Our goal is to determine the full extent of wrongdoing in the industry and its effect on consumers, to punish those involved in misconduct, and to implement appropriate corrective measures."

Job, Jobs, Jobs

Given the amount of fiscal and monetary stimulus injected into the economy in the past few years, the level of job creation recently has been underwhelming by historical standards. But this Thanksgiving, we're taking what we can get.

Since the start of the year, roughly 2 million jobs have been created, and the unemployment rate has slipped to 5.5% from 5.7%. Part of the reason the jobless rate has fallen is that thousands of workers have become discouraged and have simply dropped out of the labor force.

Still, rising payrolls have helped to offset the sharp increase in energy costs. And according to a poll by Blue Chip Economic Indicators, the economy probably grew at a 4.4% pace this year, above the long-term average.

Next year could be another story, however. Over the past few weeks, economists have lowered their 2005 growth forecasts to around 3.5%, saying consumer spending could slow down as interest rates continue to rise.

"The economy will be growing too slowly to allow the labor market more than an occasional good month in the first half of 2005," warned Ken Goldstein, an economist at the Conference Board.