Blue chips continued to climb to new heights, pushing beyond the record levels reached in yesterday's rally after a better-than-expected reading on the labour market.
The Dow Jones Industrial Average climbed 42.47 points, or 0.3 per cent, to 14,296.24 in late trading on Wednesday. On Tuesday, the blue chips soared 126 points to punch through a closing level not seen since before the turmoil that ensnared the markets for five and a half years. Dow industrials have climbed for three sessions in a row and five out of the past six.
The Standard & Poor's 500-stock index tacked on 1.67 points, or 0.1 per cent, to 1541.46. But the Nasdaq Composite Index fell 1.77 points, or 0.1 per cent, to 3222.36, pulled down by Apple and Google, which shed 1.3 per cent and 0.9 per cent, respectively.
Stocks have recovered with the aid of the Federal Reserve's aggressive efforts to boost the economy, strengthening corporate profits and a reinvigorated housing market.
"If you look at the equity market when we were at the same point back in 2007, two key sectors--housing and financials--were clearly rolling over," said Michael Shaoul, chairman of Marketfield Asset Management.
"This time, the homebuilding sector is taking off and the financial sector seems to be putting its big issues behind it, so we have key pieces of the economy with some acceleration behind them. I would say that, given we're in the middle innings of economic improvement, we should leave the 2007 levels well behind us," he said.
Stocks have gained ground this year at such fast clip that many investors have voiced concern that a pause is long overdue.
"I think we've come a little bit too far, too fast [in stocks], and might need to consolidate some of these gains, but the momentum is clearly in the upward direction," said Brian Lazorishak, portfolio manager and quantitative analyst at Chase Investment Counsel.
Stubbornly high unemployment and continued worries about political turmoil in the US and Europe also have left some investors skeptical about the market at current levels.
But investors absorbed positive economic reports, as the first reading on the labor market in a heavy week for jobs data came in better than forecast. Private-sector job growth for February, compiled by Automatic Data Processing and Moody's Analytics, saw an increase of 198,000 jobs, an improvement from January and above expectations. The ADP report is seen by many as a preview to the closely watched government employment report due Friday.
Factory orders for January declined 2 per cent, not as much as expected, although the December reading was revised lower.
European markets narrowly missed a notable close of its own. The Stoxx Europe 600 index slipped 0.3 per cent, a hair below its highest level since June 2008. A second reading on eurozone gross domestic product confirmed a 0.6 per cent contraction in the fourth quarter.
Asian markets rallied, with key benchmarks in Japan and Australia reaching fresh highs after Australia's fourth-quarter GDP growth met expectations. Japan's Nikkei Stock Average surged 2.1 per cent and Australia's S&P ASX 200 climbed 0.8 per cent, both closing at four-and-a-half-year highs. China's Shanghai Composite tacked on 0.9 per cent.
Front-month April crude-oil futures slipped 0.4 per cent to settle at $US90.43 a barrel, while March gold futures were flat to settle at $US1574.60 a troy ounce. The US dollar rose against the euro and the yen. Yields on benchmark 10-year Treasury bonds climbed to settle at 1.939 per cent as prices fell.
Materials and financial stocks climbed most among the S&P 500's 10 sectors. Bank of America topped the Dow, adding 3.2 per cent, while Hewlett-Packard followed close behind, tacking on 2.7 per cent.
In corporate news, shares of Dow component Microsoft declined 0.9 per cent after the European Union fined the software giant about $US732 million for breaking its promise to offer millions of users of its Windows system a choice of rival Web browsers.
J.C. Penney fell 3.5 per cent after The Wall Street Journal reported the troubled retailer's board will consider selling the company or replacing the chief executive, Ron Johnson, if the deep drop in sales can't be reversed this year. The stock closed at a four-year low on Tuesday.
Staples dropped 7.1 per cent after the office-supply retailer's quarterly net profit slumped 72 per cent, in part because of its restructuring efforts.
AeroVironment tumbled 9.8 per cent after the technology-solutions company reported fiscal third-quarter earnings and revenue well below expectations, and cut its full-year outlook, citing delays in government procurement activities.
Sohu.com slumped 11 per cent after the Chinese Internet group denied it was in talks about a plan to take the company private or delist its shares in the US The stock had soared 12 per cent on Tuesday after the South China Morning Post reported the company was in talks with several banks about a possible privatization plan.
American Eagle Outfitters sank 10 per cent after posting quarterly earnings in line with expectations, though the teen-apparel retailer gave a decidedly downbeat profit forecast for this quarter.
Underwear and pajamas maker Maidenform Brands slumped 9 per cent after projecting a steep revenue drop this quarter, saying it has been increasing promotions to clear out inventory.
In deal news, Asset Acceptance Capital surged 12 per cent after the provider of defaulted-consumer-debt recovery services agreed to be acquired by Encore Capital Group in a deal with an equity value of about $US200 million.
