Stocks mostly climbed on Wednesday, with the Dow notching a record close, as investors bought into optimism that the Federal Reserve would continue its stimulus longer than thought, ahead of reports this week on the economy and the labor market.
Equities are doing well "under the belief that the Federal Reserve is willing to push tapering off a bit," said Robert Pavlik, chief market strategist at Banyan Partners LLC, of thinking the central bank would hold off on reducing its $85 billion in monthly asset purchases.
The Dow Jones Industrial Average closed up 128 points at 15,746.88, easily beating its record of 15,680.35, set last Tuesday. Microsoft paced blue-chip gains, with the software company hitting a 12-year high and on pace for its largest yearly gain since 2009.
"Given we're in a bull market, so long as we don't have bad news, the market is going to creep higher," said Randy Frederick, managing director of active trading and derivatives at Charles Schwab. That said, "100-point moves on the Dow is a little much, just in the absence of bad news," said Frederick, who anticipates a bout of profit taking on Thursday.
The S&P 500 also rose 7 points to 1,770.49, coming within reach of its record, with telecommunications and utilities the best performing and consumer discretionary and health care the worst of the S&P's 10 major sectors.
Erasing gains, the Nasdaq declined, with Telsa Motors shares losing more than a quarter of their value a day after the electric-car maker reported a softer-than-anticipated quarterly profit, with third-quarter deliveries of its Model S also disappointing to some.
The CBOE Volatility Index (VIX), a gauge of uncertainty in the market, wavered just below 13.
For every seven stocks on the decline, nearly eight rose on the New York Stock Exchange.
The dollar fell against the currencies of major U.S. trading partners and the yield on the 10-year Treasury note used in figuring mortgage rates and other consumer loans fell 3 basis points to 2.65 percent.
Stocks added to their gains after the Conference Board's leading economic indicators rose 0.7 percent in September.
"With the leading index pushing higher yet again, those calling for a 'top' in equities are likely to be thwarted a bit longer," Dan Greenhaus, chief global strategist at BTIG, noted in emailed commentary.
Wall Street's advance, which has the S&P 500 up nearly 24 percent for the year, is "a little odd," said Pavlik. "Longer term, the whole thing smells to me like the stock market could use a bit of a pause to refresh. If it doesn't occur within the next couple of weeks, then it's likely to happen in the last week or two of the year," Pavlik said. Likely catalysts in December would include worries about another "government shutdown; sequester cuts that are supposed to be taking place in 2014, and then tapering talk," he added.
Of the 423 companies in the S&P 500 that have reported earnings for the third quarter, 68.3 percent have reported earnings above expectations, 9.5 percent have matched, and 22.2 percent have missed, according to Greg Harrison, a senior research analyst at Thomson Reuters. Typically, 63 percent beat, 17 percent match and 21 percent miss, he noted.
Of those that have reported, 53.5 percent have beaten revenue estimates and 46.5 percent missed, compared to 61 percent that beat and 39 percent that typically miss, added Harrison.
Reports on gross domestic product and non-farm payrolls are expected later in the week.
Fed officials have reiterated in each policy announcement this year that their target interest rate would stay close to zero so long as unemployment surpasses 6.5 percent and as long as projected inflation is not above 2.5 percent.
"Goldman said they expect the Fed to lower the number for unemployment, so 6 percent rather than 6.5 percent," said Pavlik of written comments on Tuesday by Jan Hatzius, chief economist at Goldman Sachs Group, who noted two papers by Fed board members supported the notion of a lower threshold for hiking the federal funds rate.