In the week to Friday, cut short by the New Year's holiday, the Dow Jones industrial average of 30 blue-chip companies gained 0.83 per cent to 10,409.85, its sixth consecutive weekly gain.

The broad-market Standard and Poor's 500 index, also higher for the sixth straight week, added 1.08 per cent to 1,107.74.

The tech-heavy Nasdaq composite meanwhile gained 1.67 per cent for the week to 2,006.75, gaining for five of the past six weeks.

Wall Street closed out 2003 Wednesday with a stellar performance, ending a three-year losing streak that represented the worst bear market in decades. The Dow gained 25 per cent for the year, with the S and P index up 26 per cent and the Nasdaq rising a sizzling 50 per cent.

Although the market was mostly lower Friday, most analysts remained upbeat on prospects for stocks in 2004.

"The market is fine," said Mace Blicksilver, director at Marblehead Asset Management.

"There's no doubt that next week or so it will be back to new highs."

Alfred Goldman at AG Edwards expects a volatile year in 2004, with the market reacting to terror concerns, developments in the presidential election campaign and a possible hike in US interest rates.

"The dominant mood among investors is one of cautious optimism," Goldman said. "If this mood continues in 2004, as we believe it will, investors will be smiling a year from now but may need blood pressure medicine."

Economist Harry Dent of the HS Dent Foundation, a demographics and market forecasting firm, said he sees a mild correction in the market amid concerns about slowing growth and terrorism.

"We're not expecting a major correction, just a healthy pause that will allow the market to catch its breath in light of the strong economic growth that we experienced in the second half of 2003 and the heightened tensions caused by the apparent increase in terrorist threats," he said.

Dent said he thinks the correction should be complete in first quarter of 2004, allowing the bull market to resume.

"The most attractive downside buy target in the Dow will be around 9,600 and the anticipated correction shouldn't take it below 9,000, even in a worst case scenario," he said.

"The second quarter of 2004 should see the Dow begin rebounding toward the range of 10,800 to 11,300 later in the year."

The economic reports over the past week were consistent with the strong recovery scenario.

The number of people filing new claims for US unemployment benefits hit a three-year low of 339,000 in the week to December 27, a better showing than expected.

Meanwhile the Institute of Supply Management's survey on manufacturing activity for the month of December rose to 66.2 from 62.8 in November, reaching its highest level in 20 years.