While economic bulls and bears were hashing it out this week, investors were busy snapping up stocks.

Indeed, the major averages rose to their highest levels in over three years, as oil prices declined and portfolio managers chased returns before the end of the year.

Few sectors were left behind. Although technology stocks came under pressure Thursday after Micron Technology ( MU) and Red Hat ( RHAT) reported disappointing results, the tech-laden Nasdaq rose 1.2% for the week to 2161.

Retail, cyclical and consumer products stocks also moved higher while health care issues gained ground despite continued controversy over Pfizer's ( PFE) arthritis drug Celebrex and more bad news for AstraZeneca ( AZN). Even oil and oil service stocks posted mild gains amid a 5% drop in the price of crude.

For the week, the Dow rose 1.7% to 10,827 while the S&P 500 added 1.3% to 1210.

While liquidity and momentum have been strong recently, the debate about the economic outlook continues to rage.

Earlier in the week, the Conference Board's index of leading economic indicators, a gauge of future activity, rose for the first time in six months.

But some economists pointed out that four of the index's subcomponents are still in negative territory, including the yield curve, which is considered one of the best predictors of future growth.

Over the prior five months, the LEI had fallen a cumulative 1.3%, the worst performance since mid-1995, suggesting an economic slowdown might be on the way.

Sherry Cooper, chief economist at BMO Nesbitt Burns, said the index is misleading, however, because 80% of the decline in recent months has been due to just two indicators -- vendor delivery days and the flattening of the yield curve -- both of which have moved from overextended positions.

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