The Dow closed within striking distance of a new record following another batch of strong earnings reports.
"I think this market is acting great," said Todd Leone head of listed trading at Cowen & Company. "We've had a tremendous rally and we’re still making a number of new highs. It's really acting well."
The Dow Jones Industrial Average made an intraday move above the record close of 12,786.64 but closed just 13 points shy. The blue chip index was boosted by strong quarterly reports from Coca-Cola and Johnson & Johnson, as corporate earnings continued to exceed consensus expectations.
The S&P 500 rose for the tenth time in 11 sessions, ending about 55 points below the record from March 2000. The Nasdaq lagged, ending with a tiny loss of 0.05%, but the tech-focused index has outperformed in 2007, with a year-to-date gain of 4.2%.
"Ever since the end of March the short term momentum has been bullish," said Bill Strazzullo, chief market strategist at Bell Curve Trading. "Since then it's been up, up, and away. The issue here is that we have people out from the February selloff, that's going to give us the fuel to make another leg higher."
"Investors should focus on the fact that multiple indices have been reaching all-time highs and that's encouraging," said Michael Sheldon, chief market strategist at Spencer Clarke.
Coca-Cola reported earnings above analysts' consensus estimates as first-quarter profit rose 14%. Shares of the world's largest beverage maker rose more than 2.5% and gave a lift to the consumer goods sector.
Meanwhile, Johnson & Johnson took healthcare stocks higher after the company posted quarterly earnings above Street estimates, citing sharply higher sales of drugs, medical devices and consumer products.
The financial sector added modest gains following a big rally of more than 2% on Monday, which had been fueled primarily by strong earnings from sector bellwether Citigroup.
Wells Fargo, the nation's fifth largest bank, said its net income increased 11% in the first quarter, beating Wall Street expectations as loans and core deposits grew.
Two of the largest online brokerages posted mixed quarterly results, however, as a volatile stock market hurt earnings for TD Ameritrade Holding while Charles Schwab fared only slightly better.
TD Ameritrade closed fell wider than 9% after the company reported weaker-than-expected earnings and warned that full-year results would fall short of its forecast, reflecting both weaker trading and a $100 million overhaul of customer service. Schwab fell 2.3% following in-line earnings of 22 cents a share.
KeyCorp closed lower after the financial services firm reported disappointing earnings and lower-than-expected guidance.
Energy commodities declined for the third straight session. New York light crude futures turned lower.
Investors were encouraged this morning by benign inflation data and a positive surprise for the housing market. The consumer price index, or CPI, was in-line with expectations while monthly housing starts rose 0.8%, beating analysts' expectations for a decline of 1.6%.
Homebuilders KB Home and D.R. Horton both saw shares gain more than 4% while Lennar and Pulte Homes rose more than 2%.
"I'm not surprised to see the market rise after the economic news we saw this morning," said Al Goldman, chief market strategist at A.G. Edwards. "We had positive inflation news and positive news from the much maligned building industry."
Treasury prices rose modestly, sending yields lower.
Europe Closes Mixed, Asia Retreats
The London FTSE-100 closed lower, the Paris CAC-40 ended down slightly while the Frankfurt DAX finished modestly higher.
Britain's biggest retailer, Tesco, met analysts’ expectations with a 13% rise in annual underlying profit and announced a plan to return up to $6 billion to shareholders. Shares in the retailer were one of the few gainers on the FTSE-100, up 1.37%.
U.K. department store group Debenhams saw shares fall 12% after the company said it will likely fall short of annual earnings targets, despite reporting a 34% rise in first-half income.
Tokyo's Nikkei 225 Average fell from the morning's seven-week highs, weighed down by declines in companies such as Toshiba, Sharp and Matushita Electric.
South Korea's Kospi Index also retreated from a record high, as investors locked in gains, although retailers gained on data showing department store sales slowed only slightly in March.
Hong Kong's Hang Seng Index was slightly higher despite declines from Shanghai Electric Group, which fell 6% after 2006 earnings came in below expectations.