U.S. stocks should extend their rally next week, taking the Dow to fresh records, as long as corporate earnings keep topping expectations and beat back concerns that equities have gotten a tad pricey recently.

Next week, which is smack in the middle of the third-quarter earnings reporting period, the Federal Reserve's monetary policy committee meets and is expected to leave interest rates unchanged again, making the two-day meeting a likely nonevent for stocks.

Investors will need to be cautious of huge, index-moving, swings like those of the shares of heavy equipment maker Caterpillar Inc. (CAT) which sorely disappointed investors with a smaller-than-expected profit and a poor outlook, and easily held the Dow in negative territory in Friday trading.

A flood of earnings reports is expected. Companies due to report next week include American Express Co.(AXP), AT&T Inc.(T), Ford Motor Co.(F), Halliburton Co.(HAL), Kimberly-Clark Corp.(KMB), Texas Instruments Inc.(TXN), Kraft Foods Inc.(KFT) and Exxon Mobil Corp.(XOM)

"I think the fundamental earnings figures that are going to come out are going to be positive enough to keep us inching forward," said Brett Gallagher, deputy chief investment officer with Julius Baer in New York.

Third-quarter earnings for Standard & Poor's 500 companies are on pace to rise close to 15 percent from a year ago, according to Reuters Estimates. That would be the 17th straight quarter of double-digit profit growth for U.S. companies.

"As long as we have a combination of solid earnings, a market-friendly Fed and no geopolitical trepidation, gains in stocks may still continue," said Andre Bakhos, president of Princeton Financial Group in Princeton, New Jersey.

The Fed is expected to leave interest rates unchanged at its policy-setting committee meeting Oct 24-25.

Yet when the market reaches key psychological levels, such as the Dow hitting a record high on Oct. 3 after passing a nearly 7-year old benchmark set during the Internet boom, or breaching the 12,000 level earlier this week, it has caused investors to lock in profits and sell shares.

"A lot of people who look at breadth and technical nature of the markets say we are a bit overbought right now, so there could be a technical argument for why we pull back," Baer's Gallagher added.

Existing home sales data for September are due on Wednesday, a report on durable goods orders for September is expected Thursday and the final reading on October sentiment from the University of Michigan is due on Friday.

"The Fed meeting should really be a nonevent," said Marc Pado, U.S. market strategist with Cantor Fitzgerald & Co. in San Francisco. He added that the housing data "would have to be a very disruptive number to worry people."

A sharp drop in crude oil prices since mid-July and the Fed's decision to keep interest rates steady in its last two policy meetings have helped underpin the rally in stocks, with the Dow Jones industrial average piercing the 12,000 milestone on Wednesday.

Gains in International Business Machines Corp., which reported stronger-than-expected earnings late Tuesday, helped drive the Dow over the 12,000 mark the next day.

U.S. stocks were little changed on Friday after industrial bellwether Caterpillar Inc. missed earnings expectations and the heavy equipment maker lowered its outlook, offsetting a strong profit from Google Inc. and the benefit of falling oil prices.

For the week, the Dow gained 0.35 percent, S&P 500 rose 0.22 percent and the Nasdaq shed 0.64 percent.

To be sure, not everyone thinks solid earnings alone will keep indexes moving higher.

"We are set for a pullback unless earnings guidance going forward continues to be strong. That's what needs to happen. If that doesn't happen, then this will be a short-lived rally," said Neil Massa, senior U.S. trader at MFC Global Investment Management.