U.S. stocks briefly broke into fresh record territory Tuesday on a wave of cautious optimism for the global economy that also drove German stocks to an all-time high and Japanese stocks to the best levels in five years.
The S&P 500 and the Dow smashed key barriers last week and continued to get a lift on the idea that the global economy, in particular the United States, is not as weak as feared. Friday's better-than-expected April employment report, which showed 165,000 nonfarm payrolls and major revisions for past months, helped drive the change in sentiment.
On Tuesday, the Dow traded as high as 15,024 and the S&P continued to score new highs, touching 1623, before reversing course on selling in tech stocks.
Energy, industrials and materials, groups that benefit from global growth, led the market higher earlier but turned lower with tech. The three sectors have been the worst performers year-to-date.
Stocks were higher around the globe on several factors. The Reserve Bank of Australia delivered a major surprise overnight, cutting interest rates to a record low, on the heels of a move by the European Central Bank last week. German industrial orders rose in March, while forecasts that had expected to see decline.
"You have another central bank weighing in on the rate cut bandwagon," said Mark Luschini, chief investment strategist at Janney Montgomery. He said the data on German industrial output as well as European services sector activity were helping drive gains, in addition to a rally in the European banking sector on better-than- expected earnings from HSBC.
But the global rally does not appear to be bringing back retail buyers.
"I think that investors are recognizing it's something they ought to be tuned into, but there's still a wariness of the market by individual investors who think it's gone too far, too fast. They are still carrying some wounds from 2008 and they're still sensitive," he said.
The Labor Department issued new employment-related statistics Tuesday at 10 a.m. ET, which showed that employers posted fewer job openings in March compared with February and they cut back on hiring. The JOLTs report showed that job openings fell 1.4 percent to a seasonally adjusted 3.8 million jobs, and total hiring declined 4.3 percent to 4.3 million.
"If you look at the domestic data over the last four out of six weeks, sequentially, the news has weakened, and it is supportive of the summer swoon," said Luschini. "But that said I don't think the conditions are the same as they have been for the last couple of years."
But he does think a more shallow sell off could be in the offing. "I do think equities, after having risen some 14 percent this year, are vulnerable...unless we get some economic validation," he said.