Rising rates, phase-out of stimulus could stall bull market - USATODAY.com

Rising rates, phase-out of stimulus could stall bull market - USATODAY.com: "NEW YORK — The Wall Street bull is buoyant again. The ka-ching sound coming from the stock market is growing louder as the Dow keeps levitating higher: 7000, 8000, 9000, 10,000, 11,000. Do I hear 12,000?

Investors are becoming more upbeat about the prospects for a sustainable economic recovery. Job offers are replacing pink slips. Shoppers are returning to the malls. Mortgage delinquencies appear to have peaked. CEOs at top companies that make computer chips, extend loans to borrowers and transport packages and other goods via trucks and railroads say business is better and profits are climbing.

All the good news piling up recently prompted Bank of America Merrill Lynch to boost its return projections for the stock market. The firm is now calling for a further rise of 13% over the next 12 months. Stocks are up 76% from the March 2009 low.

Put simply, 'Near term, stuff looks good,' says Michelle Clayman, chief investment officer at New Amsterdam Partners.

But the long-term outlook is cloudier. Indeed, it is what comes after the immediate burst of economic activity — driven largely by $787 billion in government stimulus money and short-term interest rates near 0% — that still worries Clayman and other skeptical stock strategists and economists. While there is a case to be made for the stock rally continuing, there is also a vocal group of doubters who still contend that the market remains on a shaky foundation in the aftermath of the worst financial crisis since the Great Depression."