While the market will likely enter January quietly, with many traders still out for the holidays and few major catalysts, the upward trend is seen continuing next week, especially in some of 2013's high-flying names.
Economic growth is expected to accelerate next year, boosting employment and consumer purchasing power. But with markets repeatedly notching all-time highs, that may not translate to market gains as dramatically as in 2013.
"There's a pervasive feeling that the economy is getting better, and the Fed is still on the market's side after saying it would keep rates low," said Donald Selkin, chief market strategist at National Securities in New York.
"However, while new money will still be flowing into stocks next year, probably we'll see less money come in. There's little chance of another 30 percent gain or so next year."
The S&P 500 has risen 29 percent so far in 2013, its best annual performance since 1997. The Dow Jones industrial average is up 26 percent while the Nasdaq is nearly 38 percent higher.
The gains have been widespread, with all 10 S&P 500 sectors higher on the year. The weakest group, telecoms, rose 6.5 percent while consumer discretionary led the year with a gain of 40 percent.
One of the market's biggest boosts this year - the Federal Reserve's stimulus program - will not be as strong a factor after the central bank announced a slowing of the program in December. The Fed beginning in January will buy $75 billion in Treasuries and mortgage-backed bonds per month, down from $85 billion, and Fed Chairman Ben Bernanke, whose term expires on Jan. 31, 2014, suggested the U.S. central bank could continue to slowly reduce that stimulus throughout 2014.
The latest Reuters poll showed analysts expect the S&P 500 to rise to 1,925 points by the end of 2014, which represents a rise of 4.5 percent from current levels.
Subscription video company Netflix Inc was the S&P's strongest performer in 2013, with a jump of almost 300 percent, followed by electronics retailer Best Buy Co Inc and semiconductor maker Micron Tech, both of which climbed nearly 240 percent. Tesla Motors was another standout, soaring 346 percent, while Facebook Inc more than doubled.
These names could see more upside this week due to "window dressing," a practice in which investors buy securities with big gains to improve the appearance of their holdings before presenting the results to clients. The 2013 year will close out on Tuesday, with the market closed on Wednesday for the New Year's Day holiday.
"Consumer discretionary and tech names have driven the market over the past 12 months, so it wouldn't surprise me to see continued upside on them next week," said Jake Dollarhide, chief executive of Longbow Asset Management in Tulsa, Oklahoma.
However, Dollarhide said the names were "priced for perfection" and vulnerable to pullbacks next year.
"There won't be a sudden 'let's sell Micron and Netflix' movement, but if profit growth slows or a conference call doesn't go well, absolutely you could see a 20 to 30 percent selloff after doubling this year," he said.
The fourth-quarter earnings season will not start in earnest until the second week of January, but there will be a few clues into the economy's strength coming out next week, with data on consumer confidence and manufacturing.
Next week will also see reads on the housing market with November pending home sales on tap for Monday and the Case/Shiller report on October home prices on Tuesday. The housing sector has been in focus as U.S. benchmark Treasury yields rose to two-year highs, which could put pressure on mortgage rates, which are typically driven by the yield on the 10-year Treasury note.
"If yields stay this high, I would consider that both a technical and psychological negative for markets," said Mark Grant, managing director at Southwest Securities in Fort Lauderdale.
Pending home sales, or sales which are in contract but not yet closed, are seen rising 1 percent while the October home prices are expected to rise 0.8 percent.
In the latest week, the Dow rose 1.6 percent while the S&P was up 1.3 percent and the Nasdaq rose 1.3 percent.