NEW YORK — Investors, albeit with some hesitation over the past two weeks, have continued to push the market higher in May, a sign of confidence in the nearly three-month rally heading into Memorial Day, which typically marks the start of the slow summer months.

Research from Plexus Asset Management shows that market returns for the S&P 500 Index, from 1950 to April 2009, have on average been much lower from May to October.

"There's normally a cautious factor in the summer because a lot of people go away and close the books and the market takes a rest," said Peter Cardillo, market economist at Avalon Partners. "But this time could be different, as I believe we're coming out of a recession."

Stocks have plowed ahead for most of May, and the market has so far held onto most of its rally that began in early March and led the broader S&P 500 to surge nearly 35 percent.

"I think this time it's 'buy in May and stay,'" said Cardillo, referring to the idea that investors might have kept their long positions, or bets that stocks will rise, throughout the month of May so far.

A three-digit loss Thursday and a late drop yesterday skimmed those gains, however. The Dow Jones industrial average ended down 14 points yesterday, or 0.2 percent, at 8,277. The S&P 500 dipped 1.3 points, or 0.2 percent, at 887, while the Nasdaq Composite Index dropped 3.2 points, or 0.2 percent, to 1,692.

With thin volumes ahead of the Memorial Day holiday making trading volatile, the market still held onto slim gains this week, with the S&P up 0.5 percent, the Dow up 0.1 percent and the Nasdaq up 0.7 percent.

For May, the S&P remains up 1.6 percent; the Dow is up 1.3 percent, while the Nasdaq is down 1.5 percent after leading the gains over the past two months.

Still, over the past two weeks, the market has begun to show signs of hesitation. It fell last week and came under pressure earlier this week as the Federal Reserve downgraded its economic forecasts for the year while sounding a more cautious tone on the economy.

Much of the confidence allowing the market to stay the course through May is belief the economy is on the mend.

"However, it looks like there might be some hurdles that could set the stage for a traditional summer setback," said Robert Kavcic, market strategist at BMO Capital Markets. "For one, the easy 'depression-averted' gains have been booked, and continued strength will likely hinge on signs of a strong recovery."

Missing the bet that the rally since March marks the beginning of a new bull market could be painful for investors hoping to continue cashing in over the summer.

"May through October in secular bear cycles has been ugly," according to John Mauldin, editor of the Thoughts from the Frontline financial newsletter, writing in its May edition. "There are times when you should be cautious and times when you should throw caution to the wind. I think this is the former," he said.

"While some pundits are talking about green shoots and the second derivative of growth, this economy may be worse than their rosy forecasts of the end of the recession," Mauldin added.