S&P, Dow Close at Record Highs as Financials Surge; Apple Drops 2.5%
Stocks closed at fresh all-time highs on Tuesday, led by big gains in financials, after widely followed hedge fund manager David Tepper said he is "definitely bullish" on stocks. The Dow rose for a record 18th consecutive Tuesday.
The head of Appaloosa Management often has been credited with sparking the "Tepper Rally" in September 2010, when he told CNBC then that the Federal Reserve would support equity prices.
He again stated a position that liquidity would guide the markets, whether in the U.S. or other global markets where central banks are easing conditions. He also cited an improving economy, particularly housing and autos as reason to be bullish.
"What's going to make you bearish?" Tepper said. "I think every place is the place to be in the stock markets of the world."
(Read More: It's a 'My Cousin Vinny' Market, Bullish Tepper Says)
The Standard & Poor's 500 climbed 1 percent to reach a new record high of 1650.34. The Dow Jones Industrial Average added 0.8 percent to close at 15215.25 while the Nasdaq climbed 0.7 percent to finish the session at 3462.61.
Morgan Stanley's Andrew Slimmon told CNBC, "Basically, what David Tepper is saying is the whole rally from the low has only been about earnings. We haven't had any P/E expansion until this year. And so we could have a combination of pretty good earnings plus P/E expansion. That makes for a pretty good market."
(Read More: Expect 1,900 on the S&P 500: Laszlo Birinyi)
All 10 S&P sectors rose on Tuesday, with the biggest gains coming from financials and energy.
Techs underperformed after Apple shares sold off sharply in afternoon trading, down nearly 2.5 percent in heavy volume on no apparent news.
Turning to corporate news, hedge fund manager Dan Loeb recommended that Sony break off part of its entertainment business. The proposal found a warm reception on the Street, with Sony ADRs surging 10 percent.
In other news, Dell will release weaker-than-expected earnings on Thursday, five days early, sources told CNBC. The earnings trend reportedly points to annual operating income well below $3 billion. The stock closed lower.
At Morgan Stanley's annual shareholder meeting the investment bank told investors it will hit 10 percent return on equity by 2014 subject to appropriate capital returns.
(Read More: Morgan Stanley Shareholders Give CEO Gorman a Pass)
In economic news, import prices dropped 0.5 percent in March, about inline with consensus forecasts, while export prices dropped 0.7 percent.
Also, the National Federation of Independent Business reported that its sentiment index rose last month, though owners remain cautious.
The earnings calendar was light on Tuesday with Agilent the only major company reporting after the bell.
So far, 90 percent of S&P 500 companies have posted quarterly results, with 67 percent topping earnings expectations and 24 percent missing forecasts, according to Reuters. If all remaining companies post numbers in line with estimates, earnings will be up 5.3 percent on last year.
However, sales numbers have come in 1 percent below estimates on average, with only 46 percent of companies beating their revenue projections.