US stocks reach new highs despite fears over Iraq

US stocks jumped to fresh records this week as the Federal Reserve's  promise of continued low interest rates from the Federal Reserve offset turmoil in Iraq that lifted oil prices.
The Dow Jones Industrial Average jumped 171.34 (1.02 percent) to 16,947.08, while the S&P 500 shot up 26.71 (1.38 percent) to 1,962.87. Both stood at records at week's end.
The tech-heavy Nasdaq Composite Index advanced 57.39 (1.33 percent) to 4,368.04.
Equities were in positive territory most of the week, but the strongest gains came Wednesday after Federal Reserve Chair Janet Yellen downplayed higher inflation numbers and signaled benchmark interest rates would remain low through 2015.
"What's driving the market now is central bankers," said Alan Skrainka, chief investment officer at Cornerstone Wealth Management, who said Yellen was too dovish.
"I really feel the Federal Reserve should be a little less accommodative and send a message that they're not going to be caught behind the curve when it ultimately becomes time to raise rates."
While Skrainka still believes the US economy is strengthening, he said the stock market at this point is "fully valued" and warned a correction could come in the short-term if there is a negative news surprise, such as a sudden worsening in Iraq.
Art Hogan, chief market strategist at Wunderlich Securities, gave a more bullish outlook on stocks and praised the Fed's tone. But Hogan agreed Iraq remains a wild card for US stocks.
"I think the market has grown tolerant of the near-term story, but it wouldn't take much of an escalation of violence and/or a movement closer to a disruption of energy or oil to change that narrative," Hogan said. "So it's very tenuous still."
On Friday US oil prices closed the week at a nine-month high of $107.26 a barrel as the battle against Sunni extremists showed no signs of abating. Grand Ayatollah Ali al-Sistani, Iraq's leading Shiite cleric, called on people to unite to fight the insurgents.
Besides easy liquidity from the Fed and generally improving economic data, US stocks have benefited in 2014 from a steady stream of corporate deals.
Major deals during the week included US medical-device maker Medtronic's plan to buy its Irish-based competitor Covidien for $42.9 billion, and US telecom operator Level 3 Communications' takeover of TW Telecom in a deal worth $7.3 billion.
On Friday, General Electric's proposal to buy the energy assets of French industrial heavyweight Alstom for $16.8 billion received a key boost when the French government endorsed the deal over a competing offer from Germany's Siemens and Japan's Mitsubishi Heavy Industries.
As part of the deal, France plans to take a dominant 20 percent stake in Alstom by buying two-thirds of the shares owned by French group Bouygues.
But Irish company Shire Pharmaceuticals Friday rejected a $46 billion informal bid from US giant AbbVie, saying the proposal "fundamentally undervalued" the company and criticizing AbbVie's plan to relocate its headquarters in Britain for tax purposes.
Next week's calendar includes releases on durable goods orders for May, the Conference Board's Consumer Confidence Index and several important housing indicators, including new home sales, existing home sales and the Case-Shiller Home Price Index.
The agenda also includes earnings from agricultural giant Monsanto and Dow component Nike.