NEW YORK ( TheStreet) -- The S&P 500 is clawing back toward the flat line year-to-date, and the stage seems set for a classic sprint to the finish. Monday's close at 1254.19, up 1.3%, puts the index just below its 2010 closing level of 1257.64, so a push into positive territory, assuming earnings hold up and some of these optimistic headlines from Europe actually come to pass. Ed Yardeni of Yardeni Research gave a rundown of reasons the market could pick up some momentum, saying a 5%-plus rally from here isn't out of the question. "If the Europeans continue to muddle along rather than melt down, October's rally may turn out to be the beginning of a year-end rally that could carry the S&P 500 to 1300-1350," he wrote in commentary prior to Monday's advance.
Yardeni's list of positives includes a decent earnings season so far "without much worrisome guidance," a favorable valuation proposition as long as the S&P 500 doesn't retest key levels on the downside as even a run-up to 1274 would still yield a reasonable P/E for the index of 11.7X, the mild improvement in economic data of late, the commitment of European officials to find a fix, and the prospect of more help from the Federal Reserve after the central bank's "doves started cooing about another round of quantitative easing" last week. Meantime, earnings season continues to grind on. Caterpillar ( CAT) set a pretty high bar for Dow components on Monday, so the pressure is on for 3M ( MMM) and DuPont ( DD) to pick up the baton. Both companies report before the opening bell. 3M has topped Wall Street's consensus view in the past eight straight quarters, and the average estimate of analysts polled by Thomson Reuters is for a profit of $1.61 a share in the September-ended quarter on revenue of $7.78 billion from the maker of Post-Its and Scotch tape. 3M shares have declined 9% year-to-date but analysts are mostly keeping the faith with 12 of the 19 covering the stock at strong buy (8) or buy (4). Chemical giant DuPont has a similar streak going, and Wall Street is looking for earnings of 56 cents a share for the quarter on revenue of $8.79 billion. The stock is down about 11% so far this year, worse than the Dow's decline of 1%, but the sell side is generally bullish with 11 of the 17 analysts covering the stock at strong buy (5) or buy (6).