The Dow Jones industrial average closed at a record high Tuesday after auto sales and factory orders provided the latest evidence that the economy is strengthening. Traders plowed money back into European stocks as the financial situation in Cyprus appeared to stabilize.
Health insurers powered the gains a day after the government released revised reimbursement rates for Medicare Advantage plans. The new numbers suggest that funding cuts will be less severe than analysts and companies had feared.
The Dow closed up 89.16 points, or 0.6 percent, at 14,662.01. It had risen as high as 14,684 in the late morning.
The Dow broke through an all-time record on March 5. It has risen steadily since then, routinely setting new trading highs.
The Standard & Poor’s 500 index rose 8.08 points, or 0.5 percent, to 1,570.25. It rose to within two points of its trading high of 1,576 reached on Oct. 11, 2007.
European markets closed sharply higher on the first trading day after a tense, four-day holiday weekend. Paris’ CAC-40 rose 2 percent, London’s FTSE 100 1.2 percent and Frankfurt’s DAX 1.9 percent.
The gains in European markets boosted confidence among U.S. investors. While those markets were closed for the four-day Easter holiday, many traders feared Cyprus’ precarious financial situation would worsen. That concern also weighed on U.S. markets Monday, said Peter Tchir, who runs the hedge fund TF Market Advisors.
But no bad news materialized. Instead, Cyprus’ international lenders agreed to extend until 2018 its deadline for meeting key budget targets. European markets opened higher and rose strongly after U.S. trading began Tuesday. The gains fed a virtuous cycle that sent stocks higher on both sides of the Atlantic, Tchir said.
“Everyone was waiting to see if Europe had problems from Cyprus,” he said. “Instead, we got the all-clear signal.”