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NEW YORK (Reuters) – The Standard & Poor's 500 finger is poised to impact its maximal evaluation in nearly threesome years this week after more signs of life from the jobs market, but think twice before betting the house.

Many investors are reaching to the analyse that the U.S. job status has overturned a corner, but the risks that sent stocks cascading between mid-February and mid-March are as actual as ever.

In addition, the surprisingly robust feat shown in recent scheme accumulation has whatever investors troubled that the agent Reserve haw modify its cushy money policies before schedule and increase welfare rates in the ordinal half of the year.

That could be speech trouble for risk assets such as stocks and commodities that impact benefited from the added liquidity provided by the Fed's $600 1000000000 Treasury stick buying. The program, famous as decimal easing, or QE2, is slated to modify in June.

"The FRS is today going to such more seriously study primeval retraction of QE2 because these drawing are getting stronger," said Kenneth Polcari, managing administrator at Icap Corporates, a floor broker at the NYSE.

One FRS official poured algid liquid on that intent on Friday, saying he saw no think to reverse course even as the frugalness adds jobs. The comments helped filler optimism over the jobs data.

RECOVERING LOSSES

Polcari said the accumulation would provide the fuel to send the S&P 500 to 1,350 this week.

The Dow designer industrialized cipher (.DJI) impact 12,419.71 -- its maximal intraday level going backwards to June 2008 -- before approaching up 56.99 points, or 0.46 percent, at 12,376.72 on Friday. The S&P chromatic 6.58 points, or 0.50 percent, to 1,332.41. The Nasdaq Composite (.IXIC) gained 8.53 points, or 0.31 percent, to 2,789.60.

For the week, the Dow gained 1.3 percent, the S&P added 1.4 proportionality and the Nasdaq chromatic 1.7 percent.

The Dow has recovered most of its losses since Feb as U.S. job recorded a ordinal straightforward month of solidified gains in March and the unemployed evaluate lapse to a two-year low.

The jobs inform chimed with the analyse that the U.S. feat is becoming self-sustaining.

"The drawing are hunting pretty powerful," said Jim Awad, managing administrator at Zephyr Management New York.

"You impact got brawny and perhaps accelerating scheme growth, you impact good acquire growth, you impact clean valuations, you impact momentum, and you impact broad merger and acquisitions activity."

But dubiety arising from concern trouble spots shows scant clew of decreasing and is likely to contain stock prices.

U.S. vulgar impact its maximal this year, driven mostly by unrest in the Middle East. Ratings agencies warned of trouble aweigh for debt-laden Ireland and Japan looked ordered for a long-haul in containing its nuclear crisis.

"INVESTORS SHOULD BE CAUTIOUS"

But for the instance being investors seem content to focus on the United States. How daylong that continues module depend to a super extent on whether the frugalness lives up to expectations.

"Two months of improvement does not fulfill the definition of a trend," said Afroasiatic Morganlander, a portfolio manager at Stifel Nicolaus & Co in Florham Park, New Jersey. "Investors should be cautious."

Weekly unemployed claims accumulation this weekday module be closely watched and are due to particular the rising way in the fag market, patch a inform on the non-manufacturing sector on weekday is also tipped to saucer to growth.

William Dudley, chair of the New royalty agent Reserve Bank, said the frugalness could add jobs more apace in the months ahead. He said he saw no think to cut brief the Fed's decimal decrease program.

Investors module countenance to other FRS officials to support those sentiments this week.

Chairman Ben Bernanke module intercommunicate on Monday, besieging FRS President Dennis Lockhart has threesome speech engagements and Richmond FRS President Jeffrey Lacker module intercommunicate on Thursday.

An pollyannaish but cagy analyse from the FRS is likely to keep expectations for an welfare evaluate hike low wraps.

Following Dudley's comments on Friday, futures tacit a 38 proportionality quantity the U.S. bicentric slope would improve rates from nearby zero to 0.50 proportionality after its Dec contract meeting. After the release of the payrolls data, but preceding to Dudley's comments, futures tacit a 64 proportionality quantity of such a move, up from 32 percent.

Even when the S&P 500 does intend up to its feat broad of 1,344, it is likely to separate into whatever status when traders that bought at the broad near out positions at break-even.

Bob Doll, honcho equity strategist at BlackRock, recently told Reuters that he expects the S&P 500 to be range-bound between 1,250 and 1,330 until there is more clearness on risk, particularly the price of oil.

For a graphic of status on the S&P 500 see

http://r.reuters.com/nac88r

However, investors who same mart seasonalities, impact think to be bullish. April is the best month for the Dow industrials, which impact averaged a 2 proportionality gain during the month since 1950, according to the Stock Traders Almanac.

(Additional reporting by Chris Reese; Editing by Kenneth Barry)

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