Dow Jones closes at record high

The Dow Jones Industrial Average soared to a record closing high on Tuesday, breaking through levels last seen in 2007 and as investors rushed in to join the party in anticipation of more gains.

Signs of a strengthening U.S. economy, continued support from the Federal Reserve, and fairly attractive valuations compared to other assets have boosted the Dow by almost 9 percent so far this year. A strong reading in the U.S. services sector, which accounts for the bulk of economic activity, was the latest indicator of improving demand.

Gains came across the board, with 10 of the Dow’s 30 component stocks reaching new 52-week highs on a day when 456 securities hit new yearly highs on the New York Stock Exchange. The Dow Jones Transportation Average also closed at a new high after rising 1.5 percent.

After the closing bell, Wall Street reacted to the positive news.

“Very exciting. I’ve seen a lot of Dow highs in my 44 years as a member of the exchange,” said Ted Weisberg, president of Seaport Securities.

“It’s significant in light of the fact that the overall scenario, the economic landscape clearly is cloudy at best, whether it’s domestically with the fiscal cliff issues, or the sequester issues. Pick your poison, the debt ceiling to come and the continued weakness in the euro zone and the questionable growth out of China, you can make a pretty good scenario for why the Dow shouldn’t be making new highs, yet here we are making new highs.”

Colin Cento, a businessman on Wall Street, said he hopes that the mood will continue to yield positive results.

“I thought it was great. It definitely lifts the confidence of a lot of people,” Cento said.

“And it was kind of this relief I think overall in the market. People are like, the Dow had finally hit a record number, the S&P still has a few percentage points to  go. The Nasdaq is still like 30 percent off its all time high, but it’s good that we did reach a certain high in the Dow today and I think that will continue long-term.”

One woman leaving the New York Stock Exchange even quipped that she may be able to retire one day.

“That’s good news, very good news,” she said. “The economy’s heading in the right direction.”

About 71 percent of the NYSE stocks closed higher while 67 percent of Nasdaq-listed shares ended in positive territory. About 6.41 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, slightly below the daily average so far this year of about 6.48 billion shares.

The blue-chip Dow’s forward 12-month price-to-earnings ratio was at 15.87, compared with 16.99 during the 2007 highs, according to Thomson Reuters Datastream. The S&P 500’s price-to-earnings ratio was at 13.5.

Outside the Dow, Google continued its gains with the stock rising 2.1 percent to close at $838.60 (USD), an all-time high for the Web giant. Google is the highest-priced stock in the S&P 500.

The Institute for Supply Management’s services index showed growth accelerated in February to its fastest pace in more than a year.

Markets have shrugged off the stalemate between the congressional Republicans and the White House over automatic U.S. government spending cuts, known as the “sequester.” Other recent headwinds, including political turmoil in Europe, have also been navigated without much pain, with investors using any decline as an opportunity to buy.

Among Dow stocks hitting all-time highs on Tuesday were Walt Disney Co and 3M Co. All 10 of the S&P 500’s industrial sector indexes rose, with tech shares among the day’s gainers. Just two components ended lower – Coca-Cola and Merck & Co, while Alcoa Inc ended flat.

The Dow Jones Industrial Average shot up 125.95 points, or 0.89 percent, to 14,253.77 at the close. The Standard & Poor’s 500 Index gained 14.59 points, or 0.96 percent, to 1,539.79. The Nasdaq Composite Index climbed 42.10 points, or 1.32 percent, to 3,224.13.

Qualcomm Inc rose 2 percent to $67.97 after the world’s leading supplier of chips for cellphones said it was raising its quarterly cash dividend by 40 percent. BMC Software rose 3.7 percent to $42.32 and Micron Tech added 3.9 percent to $8.73.