The Dow finished above 15,000 for the first time ever, and it may keep pushing higher, despite a chorus of critics who believe the market should do what it usually does — sell off in May.
U.S. stocks rallied into the close Tuesday, defying skeptics who have been looking for a May pullback. The Dow rose 87 to 15,056, just three months after regaining 14,000 Feb. 1.
"From the perspective that every round number we hit has people coming into stocks, it probably drags people sitting on the sidelines to consider the equity market as an investment," said Gina Martin Adams, institutional equity strategist at Wells Fargo Securities. "But as for fundamental analysis, it's meaningless. It's psychological."
(Read More: Dow Ends Above 15000; S&P Hits Record High)
Lifted by hopes for an improving economy and promise the world will remain awash in liquidity from central bank easing, global equity markets moved higher, taking the Dow with them.
The S&P 500 also reached another record, finishing at 1625, up 8 points. Both the Dow and S&P are up 20 percent since November's lows.
"The things that we look at still look good. We think it's just another step. The more critical step was (1600) on the S&P," said strategist Laszlo Birinyi.
"I raised my target. I can see the market going to 1900, but I think it's in a series of steps. The next step is 1700," said Birinyi.
The S&P 500 and the Dow smashed key barriers last week and continued to get a lift on the idea that the economy 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.
German industrial orders Tuesday were higher, a surprise to a market expecting a decline. That helped drive German stocks to record highs.
Increased activity by central banks also helped — with the Reserve Bank of Australia announcing a surprise rate cut Tuesday, following on the European Central Bank's rate cut last week.
(Read More: World Party: Stocks in US, Germany Hit New Record)
"You can argue there's any number of reasons [buyers are] getting dragged in. It's not earnings growth," said Adams, who like many analysts and traders has been expecting a pullback.
"The question then becomes, how durable is that attraction?" she said. "The price trend is very steady and very strong and as long as the price trend remains strong, there's really no reason to fight against stocks in the short term. In the longer term, I cling to my belief that earnings do matter, but I may be proven wrong for a lot longer."
There are some key earnings to watch Wednesday including Toyota, Deutsche Telekom, ING Group, Enbridge, Sodastream, Wendy's, AOL and Liberty Media, ahead of the market open.
News Corp, ActivisionBlizzard, Tesla Motors, Green Mountain Coffee, Transocean, and Groupon report after the close.
Sell in May?
But the talk in markets Wednesday will continue to be about whether investors will be selling in May, pocketing the year's strong gains.
Birinyi dismissed the notion that the market will have to sell off because of the seasonality of May, which for the past three years has seen a selling wave, giving credence to the adage, "Sell in May and go away."
"Those things work until they don't work," he said.
"I still don't see those things that would really trouble me. It's orderly. It's somewhat rational, and it is still muted," said Birinyi. He said the market is helped by the doubters, like those, for instance, who only give credit to Fed easing for the rally.
Adams points out that this is the week where the negative tone of May has typically taken over.
"It's a fascinating start to the month of May. At least so far, it's included a cyclical rotation into riskier asset classes. In a lot of ways, it's a reverse of March and April, but I don't want to get too carried away," she said.
Among the best performing sectors so far in May are industrials, consumer discretionary, energy, and tech, all sectors that do better in a global growth environment.
The laggards this month include utilities, telecom, and health care, which include safe havens and dividend payers that have been the best performers of the year-to-date. Financials fall into both groups, among the year's top performers and a recent winner.
Treasurys have also been losers, with selling taking yields down sharply in just days. The 10-year yield, at its year-low last week, has moved from 1.61 percent Thursday to 1.78 percent Tuesday.
There is a $24 billion 10-year auction at 1 p.m. ET Wednesday.Traders are watching to see if the yield will rise above 1.8 percent.
Where Are the Retail Investors?
The market's milestone-breaking run continues to generate headlines, but the rally does not appear to be bringing back retail buyers in any numbers.
"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," said Mark Luschini, Janney Montgomery chief investment strategist.
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Luschini said at some point, economic data will have to become more supportive for stocks to keep going higher. And while, he does not see a big sell off as in the past three springs, 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.