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NEW YORK -- Do U.S. stocks have any rocket fuel left in the tank after skyrocketing to their steepest annual price climb in 16 years?

After posting its best return since 1997, the odds of the broad Standard & Poor's 500 stock index delivering an encore performance of similarly epic proportions in 2014 is unlikely.

Yet, while Wall Street isn't expecting gains of 25% to 30% again in 2014, after a 29.6% return for the S&P 500 index in 2013, most stock market predictions lean bullish. More gains (albeit less sizable ones) and more record highs are likely. There's a long list of positive propellants working in the stock market's favor, top investment strategists say, with rising confidence in the economy topping the list.

"The outlook," says Dan Chung, chief investment officer at Alger Funds, "is still positive. But the rate of the gains will likely be slower."

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But in the unpredictable world of investing there are always things that could go wrong and cause the first 10%-plus correction since 2011. USA TODAY has identified five stock market risks -- including the potential downside of another 2013-style market "melt-up," a sharp spike in interest rates and a return of irrational exuberance, to name a few -- that could pose problems for the bull market as it nears its fifth birthday in March.

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THE BULL CASE

There are a few key pillars underpinning the consensus bull case for stocks in 2014.

• An improving economy. The U.S. economy is expected to strengthen, which boosts the odds that GDP could grow at a 3% annual clip for the first time since 2005. An uptick in growth will provide additional support for stock prices as well as corporate profits, which are expected to grow 11% in 2014, up from around 6% last year, Thomson Reuters says.

"The economy still won't break any records, but the recovery will be broader and stronger than any year since the Great Recession," says Bob Doll, chief equity strategist at Nuveen Asset Management.

Stocks have performed consistently well in periods when GDP was trending around 3%, according to LPL Financial. The S&P 500 has posted gains in 93% of the quarters in the past 35 years when GDP was between 2.5% and 3.5%. "It's the growth sweet spot for stocks," says Jeffrey Kleintop, LPL's chief market strategist.

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There are a number of factors that could foster faster growth.

The rapid price appreciation of stocks and real estate makes consumers feel richer. The resulting "wealth effect" is likely to spur consumer spending, which accounts for two-thirds of U.S. economic activity.

"The recovery in asset prices is an important part of the story," Chung says.

And it's not just the U.S. economy that's gaining traction, says Martin Sass, CEO of investment firm M.D. Sass. Europe, Japan, China and many emerging market economies are also showing improvement, setting the global economy up for "synchronized growth," Sass says.

Negative impacts from fiscal drag and policy uncertainty are also expected to ease. The two-year budget deal hammered out by Congress a few weeks ago should reduce gridlock on Capitol Hill, take another government shutdown off the table and reduce growth headwinds.

"Peace has broken out (in Washington, D.C.)," says David Kelly, chief global strategist at JPMorgan Funds.

Peppier growth will also provide cover for a market that is neither cheap nor expensive, but instead "fairly valued." The S&P 500's once-depressed price-to-earnings ratio expanded a great deal in 2013 and is back near historic norms. The market P-E, based on trailing 12-month earnings, has swelled to almost 17 from 14.

But rising valuations don't worry Liz Ann Sonders, chief investment strategist at Charles Schwab.

"The notion that bull markets end when valuations hit historic norms" is misguided, Sonders says. "P-Es almost always overshoot to the upside."

• A pickup in corporate spending. As CEOs gain more confidence in the recovery there's a strong likelihood they will manage their businesses less defensively. The hope is Corporate America starts investing again in the future and deploys more of its record $1.25 trillion cash hoard. Cash reserves held by non-financial companies in the S&P 500 have doubled since 2008, according to S&P Dow Jones Indices.

Wall Street expects corporations to continue buying back their own shares and returning more cash to shareholders via dividends. In the third quarter of 2013, the most recent data available, S&P 500 companies spent $207.4 billion on dividend payouts and buybacks, the most since the final quarter of 2007, S&P says.

More important, investors envision CEOs ramping up spending on new plants, new business ventures and new employees, as well as deploying more cash to finance growth via acquisitions, says Ann Miletti, senior portfolio manager at Wells Fargo Advantage Funds.

"We're expecting a shift back toward more capital spending and M&A," Miletti says. "If that plays out it would be positive for the market."

• A rebound in confidence. Another bullish theme is an expected diminution of fear as the bad memories of the 2008 financial crisis recede.

A mindset shift from pessimism to optimism is likely to continue. Rising confidence often results in more consumer spending, more risk taking by investors and more aggressive spending by U.S. corporations.

Calendar 2014 will be marked by "a restoration of confidence," says Alan Skrainka, chief investment officer at Cornerstone Wealth Management.

The latest readings on consumer confidence are the highest since July, but well below the peak levels prior to the 2008 financial crisis.

• A still-easy Fed. Wall Street also seems more comfortable with the Federal Reserve's decision to start reducing its market-friendly stimulus in 2014, thanks to the Fed's additional pledge to keep short-term rates near 0% for a longer period of time after the unemployment rate, now 7%, falls to 6.5%.

Market uncertainty over Fed policy has diminished since the Fed's meeting in mid-December. That's when the Fed outlined "the timing, pace and execution" of its exit from its bond-buying program and reiterated its plans for continued market support via its "forward guidance," says Terry Sandven, chief equity strategist at US Bank Wealth Management.

"It removes a significant overhang to sentiment," Sandven says.

Indeed, there's a growing sense that the economy can continue to grow and avoid a relapse even if long-term interest rates, currently around 3%, move gradually higher once the Fed starts to "taper" its monthly purchases of U.S. Treasuries and mortgage-backed bonds. The Fed's bond-buying program, dubbed quantitative easing, or QE, is designed to boost growth by keeping borrowing rates low. QE has been likened to a steroid injection, or performing-enhancing drug, and has been cited as a key driver of stock prices.

Outgoing Fed chairman Ben Bernanke said the Fed will reduce its monthly asset purchases to $75 billion from $85 billion in January and could wind down QE entirely in 2014 if the economy continues to heal.

Still, Sonders warns that it would be "naive" to think the market won't suffer a hiccup or two as the Fed reduces its asset purchases.

• A "Great Rotation" to stocks. Bonds, the investment of choice after the 2008 financial crisis, are losing favor. The reason: Stocks are soaring. And rising bond yields mean a drop in the principal value of bonds, which means losses in bond funds, once perceived as safe.

The 10-year Treasury note yield ended 2013 at 3.03%, its highest level since July 7, 2011. And rates are expected to continue to rise. In addition, the average core bond fund lost money this year, falling by around 2%, according to fund-tracker Lipper.

The result: the roughly $1 trillion that flowed into bond funds the past five years is now finding its way back into the stock market. 2013 was the first year since the Great Recession in which net flows to U.S. stock mutual funds were positive, and bond funds suffered outflows, according to the Investment Company Institute.

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An estimated $20.9 billion flowed into domestic stock funds in 2013, while $77.2 billion flowed out of bond funds. Still, since 2008, domestic stock funds have suffered net outflows of $527 billion, while bond funds have seen positive flows of nearly $996 billion, ICI data show.

The shift of money from bonds to stocks, dubbed the "Great Rotation," has a long way to go, says Kleintop.

"Individual investors have just begun to come back into the stock market after being out for five years," Kleintop says. "The heavy lifting the past few years has been corporations buying back their own stock. (In the first three quarters of 2013, companies spent $346.3 billion on share buybacks, according to S&P Dow Jones Indices.) But we could have a whole new class of buyers -- individual investors -- and finally get the Great Rotation."

The bull market has delivered gains of more than 173% since it began in March 2009. Betting against this bull has been a bad bet, at least so far.

"My bottom line advice: Don't be the last investor to figure out we are in a bull market," Skrainka says.

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